Red tape, graft: India no super market for WalMart

Jul 08 2013, 14:53 IST
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Customers shop at a Best Price Modern Wholesale store, a joint venture of Wal-Mart Stores and Bharti Enterprises, at Zirakpur in Punjab. (Reuters) Customers shop at a Best Price Modern Wholesale store, a joint venture of Wal-Mart Stores and Bharti Enterprises, at Zirakpur in Punjab. (Reuters)
SummaryDelay and faltering partnership mean WalMart may miss out on "first-mover" advantage.

WalMart's India expansion is stalled. When India announced last September that it would allow foreign supermarket chains to take majority ownership of their local operations, it marked a victory for Wal-Mart Stores, which had spearheaded efforts to open the market and said its first retail store would open within two years.

Now, two sources within the Bentonville, Arkansas-based company's Indian unit say it is unlikely to apply for its first retail store licence before March 2015. The company has said it needs a further 12 to 18 months after winning government approval to open each store, which means its first retail outlet in the country would open in 2016 at the earliest.

Meanwhile, Bharti Enterprises, its local partner in an existing wholesale business, is reconsidering its commitment to their joint venture given the heavy investment requirement and distant prospects for returns, four sources with direct knowledge of the matter said.

Bharti denied that it is looking to exit the tie-up and said it remains fully committed to the joint venture, and a WalMart spokeswoman declined to comment on what she called speculation.

The latest developments stem from an ongoing internal bribery probe relating to its Indian operations, still-evolving rules governing foreign participation in India's retail sector, and national elections due by May 2014 that could result in the controversial retail reform being reversed - and any newly opened supermarkets being shut - the sources said.

The delay and faltering partnership mean WalMart may miss out on the "first-mover" advantage in a country considered the last great frontier for global retailers.

If Bharti pulled out, WalMart would be forced to find a new partner from a tiny pool of large local retailers to meet the requirement that a local firm owns 49 percent of the business.

On June 26, Wal-Mart announced that Raj Jain, who led its India push for the past six years, had left the company.

The world's biggest retailer named Ramnik Narsey, who recently joined the company after heading the Indian operations of Australia's Woolworths Ltd, as interim India chief, without explaining the change. Jain did not answer repeated calls to his mobile phone and the company declined to make Narsey available for comment.

Narsey headed the consumer electronics wholesale business of Woolworths in India for fifteen months, before it was sold to the Tata Group, offering little insight into what his appointment might mean for Wal-Mart's India rollout.

"It will take lot more than a management change

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