Wal-Mart to expand wholesale presence in India


Best Price Modern Wholesale is a joint venture of Wal-Mart and Bharti Enterprises. Wal-Mart plans to open 50 more wholesale outlets in India. (Ajay Verma/Reuters)

Wal-Mart plans to open 50 more wholesale stores in India over the next five years and expand its e-commerce operations, the company said Tuesday, in its latest attempt to grow its presence in the subcontinent.

Wal-Mart already runs 20 wholesale stores in the country, selling goods to local businesses. But under Indian law, foreign retailers cannot sell directly to consumers, either in-store or online, which has kept Wal-Mart and other global retailers from setting up shop in the country.

That could change depending on the outcome of India’s ongoing elections.

The party heavily favored to win — India’s Bharatiya Janta Party, or BJP — is officially opposed to allowing foreign investment in the retail sector. But the BJP’s prime ministerial candidate, Narendra Modi, is more amenable to working with international companies. During his tenure as chief minister of the Indian state of Gujarat, Modi built a reputation as a business-friendly politician.

Wal-Mart’s journey into India’s retail sector has been an arduous one since it opened its first store there in 2009. The company forged ahead despite regulatory difficulties that discouraged other businesses from entering the Indian market.

Then, in 2012, Wal-Mart said it was investigating allegations of corruption in its global arms, including the one in India. The retailer also parted ways with business group Bharti Enterprises, which jointly operated its existing stores.

In Tuesday’s statement, Wal-Mart said it was taking steps to “strengthen compliance” as it continued to investigate corruption.

“We are evaluating and reinforcing procedures and programs relating to all compliance areas, including licensing and permits, food safety, and responsible sourcing among others,” Scott Price, president of Wal-Mart Asia, said in the statement.

Wal-Mart’s store expansion plans are frozen until 2015, when it expects to have completed an internal probe, according to a report in the Economic Times.

Despite India’s slowing economy and high inflation, the retail sector in the world’s largest democracy is estimated to be worth $500 billion. It’s too soon to say if the winds will blow in Wal-Mart’s favor if Modi is elected the country’s new prime minister. But businesses waiting on the sidelines of India’s retail market are sure to be watching closely.

Amrita Jayakumar covers IT and federal government contracting for Capital Business, The Post's local business section.
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