Wal-Mart Prepares New India Venture

September 1, 2013 Leave a comment

August 30, 2013, 11:23 a.m. ET

Wal-Mart Prepares New India Venture

Retailer Expected to Formally Request Approval to Operate Supermarkets

RAJESH ROY

NEW DELHI—U.S. retail giant Wal-Mart Stores Inc. WMT +0.76% is expected to submit soon a formal proposal to the Indian Trade Ministry to operate supermarkets in the country, a senior government official said on Friday. ‎ Scott Price, Wal-Mart’s Asia chief executive officer, met with officials at the Department of Industrial Policy and Promotion, said an official familiar with the matter.“They have indicated that they will come back to us very soon with a formal proposal,” the official said.

‎Mr. Price, who attended the hourlong meeting along with two of his team members, declined to comment after the meeting.

“Wal-Mart is optimistic about growing our Best Price Wholesale cash and carry business in India, as well as future retail investment opportunities that can be made possible through a clear and predictable FDI policy,” said a Wal-Mart India spokeswoman.

‎In September last year, India allowed foreign companies to own up to a 51% stake in supermarkets. Wal-Mart’s would be the first formal investment proposal by a foreign company since the rule change went into effect.

In 2007, Wal-Mart entered into a joint venture with Bharti Enterprises, an Indian conglomerate, to open a series of wholesale stores, a sector that was open to foreign investors.

Wal-Mart already operates a series of cash and carry wholesale stores in a joint venture with Bharti Retail Ltd. There are currently 20 Best Price Modern Wholesale Stores in India, according to the company’s website.

In 2010, Wal-Mart bought $100 million in convertible debentures in a Bharti subsidiary called Cedar Support Services, a real estate company that provides services.

Since then, a series of reports seemed to indicate that Wal-Mart had decided to draw down or withdraw from India, out of dissatisfaction with the slow pace of Indian policy-making.

Recently, the Indian government amended its foreign direct investment policies governing investment in retail. It broadened the pool of local suppliers from which foreign companies can satisfy local sourcing rules, and clarified rules regarding investment requirements in back-end infrastructure.

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