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Wal-Mart set to enter India

By M Rajshekhar
May 06, 2005 15:10 IST
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The world's largest company, Wal-Mart, is leaving no stones unturned to lobby for its entry into India, says Businessworld.

Last month, David Mulford, United States Ambassador to India, met the Indian prime minister, finance minister and commerce minister purportedly at the behest of the US retailer.

In the second week of May, John B Menzer, Wal-Mart's president and CEO, will fly in to meet government officials.

Sources close to its Indian operations say that over the past 3-4 months, the unit has been busily preparing reports on the Indian market and Indian retailers. The company is also believed to have identified the cities it would like to move into.

Why the eagerness? Sources say that after its troubled start in China, the retailer doesn't want to take any chances in India.

Meanwhile, there is considerable speculation that the Indian government might make an announcement on foreign direct investment in retail in the next month or so. As reported in the media late last month, it is thinking of allowing 49 per cent FDI.

The fact that foreign retailers can't set up wholly owned subsidiaries here raises an important question. Who will Wal-Mart tie up with? An existing retailer or a non-retailer? The company is being courted intensively.

According to a former employee of the company, Wal-Mart has held meetings with all the likely partners in the country. One of the names doing the rounds is Reliance (see Ambani brothers plan retail foray). Another is Mahindra & Mahindra (M&M). When contacted, however, M&M denied any such negotiations.

Either way, when Wal-Mart comes in, it will profoundly impact the retail markets of India. The former employee expects the company to open at least 10 stores in its first phase here.

"Anything less than that will not be viable for them," he says.

Despite the troubled start, it has set up 45 stores in China within the 10 years it has been there. That will make it larger than any other Indian discount store chain, also because of larger shops and higher efficiency. After its entry, one can expect the company's sourcing operations to scale up too.

And finally, once Wal-Mart comes in, other retailers like Tesco and Carrefour are likely to step on the gas.

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