Wal-Mart Stores Inc. may open hundreds of stores in India, the world’s second-most populous nation, should the government lift a ban on foreign direct investment in multi-brand retailers.
“If the laws of the country change to opening up to foreign direct investment in retailing we could open hundreds of stores,” Raj Jain, managing director of Bharti-Walmart Pvt., a wholesale joint venture between Wal-Mart and India’s Bharti Enterprises Pvt., told reporters in New Delhi today.
Wal-Mart, the world’s largest retailer, and rivals including Carrefour SA are urging India’s government to allow overseas investment after the trade ministry invited views from the industry on removing the restriction. Ending the ban will increase investment in farming and reduce prices, according to a discussion paper from the ministry.
“Ideally we would like no cap on foreign direct investment but the fact of the matter is that the government has other compulsions and would like to take a calibrated approach,” Jain said. “We fully support it.”
Bentonville, Arkansas-based Wal-Mart runs two wholesale stores in India as local laws, aimed at protecting owners of smaller shops, limit overseas companies to operating single- brand stores, or wholesale outlets.
Prime Minister Manmohan Singh’s government is under pressure to contain price gains. India’s food inflation rate stayed above 10 percent for a 14th straight month, according to a statement released in New Delhi today.
The Congress Party-led government still needs to obtain backing from its allies for allowing foreign investment in retailers. Singh’s Congress has 208 seats in the 543-member lower house after the party’s best election win in 18 years last May and subsequent by-elections, still short of a majority.
Opposition from communist parties, which were allies in Singh’s previous government, stymied reform attempts that included selling stakes in state-run enterprises and allowing foreign investment in retail.
Jain said small stores need not fear big retailers.
“Every developing country, including China, Brazil and Mexico, has been through this and even today in China after 15 years, 80 percent of retail is unorganized,” he said. “The end consumer will benefit a lot as prices will come down.”
Wal-Mart and Bharti in April opened their second wholesale store in the northern state of Punjab. Bharti-Walmart, an equal joint venture, plans to have as many as 15 such stores by March 2012.
Bharti Retail owns a chain of grocery outlets and Easyday Market hypermarkets, according to the company’s website.