Metro Cash and Carry violated government norms: CAIT

“In effect, Metro has created a backdoor channel for indulging in multi-brand retail by creating a façade of wholesale/B2B trading,” they added.

They further alleged that Metro Cash and Carry’s business model hints that it always wanted to run a direct B2C business in India, which Indian laws and regulations do not allow for foreign companies.

“Regulations allow them 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,” alleged CAIT representatives.

According to CAIT, Metro Cash and Carry facilitated the violation by issuing “bogus cards of tax registration to consumers who were visiting the stores.” CAIT alleged that the traders who visited various Metro stores in India found this violation at each one of them and the association has videos to back its claims.

The Indian government allows 100 percent FDI in single-brand retail, however, only 50 percent FDI in multi-brand retail. Metro Cash and Carry, hence, said CAIT, cannot sell to Indian consumers as it figures in multi-brand retail.

The association urged the government to conduct a probe on Metro Cash and Carry’s operations in India and also said that the company should not be allowed to exit the country.

“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 India which is nothing but the diversion of funds by accruing huge profits in India in past years,” said CAIT national president and joint secretary in a press statement.

“These profits have been made at the cost of the Indian Government and small Indian merchants while violating several laws of the land for the last 20 years. 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,” they added.

CAIT has appealed to various authorities including the Enforcement Directorate, Ministry of Commerce & 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.

Metro AG in a statement said, "In the last 19 years of operation, we have 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,” it added.

Last month, reports surfaced that Metro Cash and Carry is looking to exit its India business and is in talks with retailers and wholesalers in the country to sell the entity. According to reports, 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 the company’s India operations.