The joint venture, to be signed in the next few weeks, is planning to open its first store by the middle of next year and will expand to 75 cities in five to seven years.

Raj Jain, president (emerging markets), Wal-Mart International, said that by bringing in supply chain efficiencies, the joint venture would be able to cut prices of agricultural products by 10-15 per cent, branded fast moving consumer goods by 5-10 per cent and textiles by 10-15 per cent. Price cuts on electronics will be in the range of 5-7 per cent and may even go up to 25 per cent for items like televisions and refrigerators.

"We will localise our entire operation. Up to 50 per cent of the goods in our outlet in a city will be sourced from around that city. Another 40 per cent will be from within 50-100 km of the city and the remaining 10 per cent would be imported," said Jain.

Such a business model is expected to improve efficiencies, especially on logistics and transportation. Wal-Mart's expertise lies in cutting costs with a strong and technically-superior supply chain. While it is planning to do the same here, Jain was tight-lipped on its exact model, as well as the investment required for setting it up.

"Cutting prices to such an extent is possible but unlikely," said a retailer in the B2B category.

The size of the wholesale stores would range from 50,000 square feet to 1 lakh square feet. "For some cities like Kanpur, Ludhiana and Chandigarh, two stores would be enough. The National Capital Region and Mumbai would need five or six," said Jain.

Wal-Mart is also looking at long-term partnerships with the country's leading real estate developers to house the wholesale stores. In particular, it is looking to cater to small and large retailers in upcoming townships. While Wal-Mart is finding Indian real estate prices challenging, it is comforted by cheap labour and low operating margins in India.

Wal-Mart sources goods worth $600 million directly from India and worth $1.2 billion indirectly. "Our sourcing from India is growing by 15 per cent annually. I would be disappointed if that did not double once we set up operations here," said Jain.

The joint venture will be looking to hire 10,000 employees directly. Given the skilled manpower crunch, Wal-Mart will be bringing in experts from overseas for training its Indian employees.