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Walmart Caught In Lobbying Controversy in India

India’s leftist party activists shout slogans during a protest in front of a Bharti Walmart Best Price wholesale store in Hyderabad, India, November 19, 2102.
In India, the government will hold an inquiry into lobbying activities by U.S. global retailer Walmart. The government’s recent decision to allow foreign supermarkets such as Walmart to set up shop in India is embroiled in controversy.

The inquiry by a retired judge was announced following a report that Walmart had spent $25 million over four years to lobby American lawmakers to gain access to overseas markets including India.

The report led to an uproar in parliament. Opposition lawmakers are demanding to know if bribes were paid in India.

Walmart says the lobbying did not involve improper conduct on its part. U.S. officials also say that the global retailer has not violated American laws as lobbying is legal.

But in India lobbying is a grey area. Although businessmen often discuss projects with government officials, companies are not allowed to spend money on lobbying. Corporate contributions to political campaigns are also banned.

As a result, lobbying is usually kept under wraps. In 2010, telephone transcripts of a prominent lobbyist trying to influence the appointment of key ministers led to a huge outcry as it put the spotlight on the nexus between big business and the government.

A public affairs professional, Dilip Cherian at Perfect Relations, says lobbying is often associated with graft.

“Ultimately lobbying is about policy alterations or policy creation. When you have a situation where policy making is shrouded in both secrecy as well as not clearly understood motivations, then the connotation is that if lobbying if successful, it must involve bribery,” he noted.

The lobbying controversy is the latest to hit Walmart, which plans to open its first stores in India in about three years following the government's green light to foreign retailers.

The government has gained parliamentary approval for its policy. But the U.S. retailer continues to be caught in a political tussle between the government and opposition parties, which bitterly oppose the entry of foreign supermarket chains.

Opposition parties allege that the ruling Congress Party is promoting the interests of foreign companies. They say that the entry of foreign retail giants will destroy the mom and pop stores which dominate in India and result in widespread job losses.

The government hopes the entry of foreign retailers will attract investment and modernize the retail sector. India, with growing numbers of middle class consumers, is seen as a lucrative market by foreign retailers.