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Walmart resumes India expansion after 3-year break

By BS Reporter
August 13, 2015 14:08 IST
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WalmartThe company rolls out first standalone store in Agra

Walmart, the world’s largest retail chain, opened its 21st store in India on Wednesday, after a gap of almost three years.

It had stalled expansion in compliance with the US anti-graft law — Foreign Corrupt Practices Act -- over possible violations in Mexico, China, India, Brazil, among others.

The latest store that has come up in Agra, the second in the city, follows one in Bhopal in November 2012.

Walmart had entered into a joint venture with Sunil Mittal-led Bharti Enterprises in 2007 for a cash-and-carry or wholesale venture.

The company had plans to enter the multi-brand retail sector once the government policy allowed foreign direct investment.

Even as 51 per cent FDI was permitted in multi-brand by the United Progressive Alliance government in 2012, Walmart made it clear conditions attached to the policy, primarily sourcing norms, were not feasible.

“FDI policy has passed. . . ’’, then Asia head Scott Price had famously said, triggering speculation on a partnership break-up.

Soon, the US chain broke off with Bharti. In the cash-and-carry format space, where Walmart is doing business in the country, there’s no restriction on FDI.

So, the Agra store signifies a break from the past as it is the first standalone brick-and-mortar expansion for Walmart India.

It ended its partnership with Bharti two years ago.

The latest expansion is a beginning for its plan to have 50 stores in five years, and such a plan indicates Walmart is a long-term player and is here to stay in India, according to an analyst.

That’s because the group has faced policy hurdles and drawn political flak besides break-up pangs and corporate issues, but it has not made an exit from the India market.

Krish Iyer, president and CEO, Walmart India, told Business Standard: “We are committed to growing this business. . . . We are on course to opening 50 more cash-and-carry stores in the next four-to-five years.

Opening the 21st store in India reiterates our commitment to the country and our growth plans.’’

Walmart had entered India with the aim of capturing the fast-growing Indian retail market, but it does not even talk about multi-brand retail any more, whatever might be its real plans.

For now, it has decided to stick to cash-and-carry, where policy roadblocks are fewer and easier to handle. Its e-commerce foray has also been restricted to the business-to-business space till now.

The company did not reply to any question asked by this newspaper on whether it had plans to enter multi-brand retail sector any time in future.

It also refused to answer on its e-commerce plans in the business-to-consumer space through the marketplace format, if any.

Although FDI is not permitted in e-commerce, most leading online chains operate through the marketplace model and are funded by foreign investors. There are no FDI caps in marketplace, as opposed to inventory-led business.

Currently, the 21 cash-and-carry stores branded as Best Price Modern Wholesale stores are present in nine states.

“We are pleased with the focus of both the Centre and states on 'ease of doing business’,” Iyer said in an e-mailed statement.

The image is used for representational purpose only; Photograph: Reuters

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