Bharti Walmart retail JV in India terminated

Oct 09 2013, 20:13 IST
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Sunil Mittal's Bharti Enterprises and Walmart said they are parting ways to operate retail stores independently in India. Reuters Sunil Mittal's Bharti Enterprises and Walmart said they are parting ways to operate retail stores independently in India. Reuters
SummaryUS retail giant Walmart, Sunil Mittal's Bharti Enterprises end speculation, cut links.

its business in India, which resulted in stalling of operations of their JV with no new stores opened in the past several months.

Although the government allowed 51 per cent FDI in multi-brand retailing in September last year, Walmart had expressed its inability to meet a 30 per cent sourcing requirement from small industries, saying it could source only about 20 per cent.

The provision was then diluted to allow global retailers to source 30 per cent of their products from small and medium enterprises only at the start of the business.

Walmart has also been probing alleged corruption practices at its Indian arm, after which Jain left the firm. In 2012, Bharti Walmart had suspended five executives, including CFO Pankaj Madan, who later quit the company.

The company's USD 100 million investment in Cedar Support Services is also being probed by the Enforcement Directorate for alleged violation of norms.

Sector observers said the development was expected, considering the recent public comments from the top leadership of the two partners.

"Also, I do not read this in the larger perspective of the FDI story, which has other aspects that need to be addressed at a different scale," PwC India Leader (retail and consumers) Rachna Nath said.

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