The Telegraph
Since 1st March, 1999
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Wal-Mart links future with retail rules

New Delhi, Aug. 8: US retail giant Wal-Mart, which signed up for a cash-and-carry joint venture with Bharti earlier this week, is keeping its options open on its mode of entering the Indian retail market when it is finally thrown open to global players.

“Wal-Mart’s entry into the $350-billion Indian retail market will depend on the way the government opens up the sector,” said Raj Jain, country president of Wal-Mart India.

If the government permits 100 per cent FDI in just the food and beverages sector, Wal-Mart might decide to enter India on its own.

However, if the government decides to open up the retailing sector through the joint venture route, Bharti could be its preferred partner. “There is no specific binding clause in the pact Wal-Mart has signed up with India's telecom giant Bharti,” Jain said.

Jain said Bharti, which was planning to establish its own wholly owned front-end retail operation, could use the Wal-Mart brandname but may have to design its own logo.

Wal-Mart plans to turn India into a major supply base for its global operations, exporting goods worth billions of dollars out of the country to its retail stores all over the world against exports of $600 million a year at present, Jain added.

The Wal-Mart country head also indicated that the wholesale venture in India would also cater to retail chains that rival Bharti’s as well as hotels, restaurants and caterers.

The Left parties have till now successfully stonewalled moves to open up the lucrative retail market and even demanded a regulator for the few Indian large-format retail chains in business, citing fears that these could sound the death-knell for millions of small grocer shops.

However, there are moves within the Congress-led ruling alliance to prise open the retail window by allowing limited foreign investment in some areas.

Jain said Wal-Mart would be inviting local suppliers as well as its global partners to help it build processing and manufacturing bases in India. These back-end supply bases will be used to supply Bharti's retail chain, other Indian retail chains that may team up with Wal-Mart and Wal-Mart stores abroad.

Wal-Mart, which in the late 1980s and early 1990s came out with the slogan “Buy American”, sourced goods worth $12 billion from China in 2002 alone. It has suppliers spread all over the globe today ranging from Latin American countries to China, India and Taiwan in Asia.

Wal-Mart would, however, invest heavily in building a cold storage chain along with partners. The Indian government allows up to 100 per cent foreign investment in food processing and cold chains.

“We will set up our first wholesale store in North India ... we are concentrating on the North, partly because our partner, Bharti, is big in this region and partly because the farm sector in the North is strong,” Jain said.

The Wal-Mart executive said the wholesale venture was already in talks with rival retail chains who did not wish to enter into the back-end of the business or would like to create alternate supply arrangements.

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