SUPERMARKET giant Walmart has told India that it is unable to meet local sourcing requirements for foreign supermarket groups wanting to open stores in the country.
Under rules introduced when the government opened up the sector in 2012, foreign supermarkets are required to buy 30 percent of their products from local small-scale industries.
Walmart said it has "orally conveyed its stand" to the government over the policy, adding to complaints from US companies that they are unable to operate in India.
Walmart, which said last year it wanted to launch its first supermarket within two years, has said it can procure only about 20 percent of its goods from small Indian industries.
"We are still very early in the process on FDI (foreign direct investment) but are excited by the opportunity in front of us," a Walmart spokeswoman said.
She added: "We continue to work with the government to better understand the rules that exist for FDI."
India's left-leaning government has opened up or proposed opening the retail, banking and insurance, airline, energy and media sectors to foreign investors -but has imposed conditions in each case.
Experts have warned some of the conditions, designed to protect local industries and counter criticism India is "selling out" to foreign multinationals, are often too restrictive and will scare off foreign investors.
The US supermarket group already operates in India as a wholesaler via a partnership with Bharti, owner of India's top mobile phone firm, but it is unable to sell directly to consumers.
Last year, New Delhi allowed foreign supermarkets to establish 51-percent joint ventures in the country as part of Prime Minister Manmohan Singh's drive to seek outside investment to perk up a sharply slowing economy.
India's opposition has expressed concern over Walmart's entry, saying it will hurt local "mom and pop" stores.
US Vice President Joe Biden was in India last week to urge New Delhi to further open its doors to US companies and press their case in the nuclear, defence and retail sectors among others.
David Cameron made a similar trip earlier this year.