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Wal-Mart, the retail behemoth, is making every effort to find its space in India.
The chairman of Wal-Mart Stores (the second biggest retail company in the world) S Robson Walton had a meeting with the Indian Prime Minister Manmohan Singh in New Delhi, in which he sought the government’s permission to make investment in multi-brand retail.
The $404-billion worth Wal-Mart tied up with the Bharti group, which manages the nation’s biggest telco for cash-and-carry wholesale trade and a dealership pact for front-end retail. The company has been making persistent efforts to obtain approval from the government for foreign direct investment (FDI) in multi-brand retail.
Rob Walton, the immediate descendent of the founder of Wal-Mart late Mr. Sam Walton, took charge as the chairman of the board of directors at Wal-Mart in 1992. Rob Walton is well known for his achievements in expanding retail business in foreign territories. The company owns more than 8,000 retail units under as many as 53 banners in 15 nations and perceives developing markets as an important source for growth.
This is considered to be the maiden visit of Mr Walton to the nation. It reflects the significance of India, the second-fastest developing nation after China, in Wal-Mart’s expansion plans.
The sources close to the matter informed that Mr Walton talked to the Indian Prime Minister about the benefits that a planned retailer such as Wal-Mart can offer to farmers and small and medium enterprises. He also spoke on job creation.
Maximum numbers of jobs have been created by retail industry in rich economies. Wal-Mart alone has employed 2.1 million people all over the world. Preeminent international retailers have also played significant role in creating jobs and supporting a large chain of manufacturers in India, especially those involved in exporting garments and various other types of household products to rich nations.
Tom Schoewe, executive vice-president and chief financial officer at Wal-Mart, said “We’re stepping up growth in our international operations to take advantage of growing economies and opportunities in emerging markets such as China and Brazil”.
Wal-Mart holds Indian market very important in its expansion plans, but the prevalent laws do not permit foreign retailers to start multi-brand stores. Foreign investment is encouraged only in the area of single-brand retail up to 51%.
The main executives of Wal-Mart have been making visits to India in order to explore its local political and business environment. Mr Walton’s visit indicates the company’s keen interest in investing in the nation. Four months back, Wal-Mart’s CEO for the international business was in India to meet agriculture and commerce ministers.
Last time, the discussion shifted on the Indian establishment urging the retailer to beef up the supply-chain that could help Indian farmers reap benefits. Mr McMillon had then told the progress of Wal-Mart in India would not face dollar constraint. He said, “We have a $4.8-5.3-billion fund earmaked for our international business. India can use as much as it wants”.
The alliance between Wal-Mart and Bharti was launched in 2006, but since then only one cash-and-carry wholesale store has been opened. That time Mr McMillon had said that the company was in no hurry, adding, “Our aim is to get it right.”
The newcomers are constantly making an effort to get a grip on the fast-growing retail market in India. Future Group is the biggest retailer in India, which runs brands like Home Town, Big Bazaar and eZone stores. India Inc’s biggies including Reliance Retail and Aditya Birla Group own chain of stores under brands like Reliance Fresh and others, respectively.
Wal-Mart has joined hands with Bharti and Tesco with the Tata group’s Trent. In near future, we can expect an alliance between Carrefour and Future too. The Economic Times
November 6, 2009
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