CAIT said that as per reports, Metro Germany is looking to sell the India business and make profits of over Rs 10,000 crore on its investment in the country
Metro Cash and Carry has been accused by the traders’ body Confederation of All India Traders (CAIT) of fund diversion and violating foreign direct investment, or FDI, regulations and flouting goods and services tax (GST) rules along with several other government norms.
Raising serious objections over the business practices of German cash-and-carry major, Metro AG’s Indian subsidiary (Metro Cash & Carry), CAIT said that the company, which as per reports, is in talks to sell its business in India, has been directly selling to consumers under the garb of its business-to-business operations.
The traders’ body alleged that Metro was “blatantly operating a B2C business” in the garb of cash-and-carry operations, in complete violation of FEMA and GST laws, making a “mockery” of the system.
In a statement, CAIT said: “As per the media reports Metro Germany is looking to sell the India business and make profits of over Rs 10,000 crore on its investment in India which is nothing but the diversion of funds by accruing huge profits in India in past years.”
At a press conference in New Delhi, CAIT national president BC Bhartia and secretary general Praveen Khandelwal said, “Metro has been violating the FDI Policy through fraudulent use of GST Registration for the issuance of the Metro membership card/ add-on membership cards and issuance of daily entry pass to walk-in customers at its stores.”
They further claimed that Metro has created a backdoor channel for indulging in in multi-brand retail by creating a facade of wholesale/B2B trading.
The CAIT representatives further alleged that the regulations enable Metro to sell only to business customers, who in turn can sell to the end consumers. “Sale to end consumers is allowed only for Indian companies to protect the livelihood of over eight crore small retailers of the country,” they said.
CAIT also urged the Central government to conduct a probe on Metro Cash and Carry’s operations in India and said that the company should not be allowed to exit the country.
CAIT said that the Rs 10,000 crore profit has been made by Metro at the cost of the Indian Government and small Indian merchants while violating several laws of the land for the last two decades. “And now Metro Germany will sell this company to another foreign company, which will come and do the same thing in India, with complete disregard for Indian laws and regulations,” the traders’ body said.
They have also appealed to various authorities including the Enforcement Directorate, Ministry of Commerce and Industry, Ministry of Finance, and GST Authorities for alleged violations by Metro Cash and Carry and asked them to ensure that Metro Cash and Carry does not exit India.
Meanwhile, Metro AG refuted the allegations and said it was fully compliant with Indian regulations.
In a statement, Metro AG said that in the last 19 years of operation, it has had an “impeccable” track record with respect to regulatory compliance and have been fully compliant with the applicable FDI regulations and laws of India.
“Therefore, we condemn the false and malicious allegations being made on us with vested interest. We question the veracity of such false data which is maliciously being used by CAIT. As a leading global organisation, we are governed by robust processes, ethics and governance mechanisms to ensure compliance with local policies and procedures,” Metro AG said.
According to reports which started surfacing last month, Swiggy, Thailand-based conglomerate Charoen Pokphand (CP group) which runs Lots Wholesale in India, Swiggy and several PE firms are in the race to acquire Metro AG’s India operations.
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