Wal-Mart seals deal for launch in India

Click to follow
The Independent Online

Wal-Mart, the world's largest retailer, is close to launching its business in India, one of the world's fastest growing retail markets, stealing a march on its rival Tesco.

The Arkansas-based company has signed a partnership with Bharti, the giant conglomerate controlled by the Indian billionaire Sunil Mittal.

The deal aims to skirt round rules barring foreign retailers from the country. Wal-Mart will invest in a joint venture controlling the distribution, while Bharti - whose main business is mobile telephony - will act as a franchisee for hundreds, and eventually thousands, of Wal-Mart-style shops across the country.

"We plan to roll out as many stores as we can in the next few years and the investment will be large," said Mr Mittal, although neither side would put a price tag on the investment.

Tesco called off talks with Bharti last week, and industry sources say it had balked at the speedy roll-out being proposed.

Despite the local shopping habits and religious dietary strictures that complicate setting up a Western-style supermarket supply chain in India, Wal-Mart has been salivating over the prospect of winning a chunk of a retail market that is predicted to double in size within a decade.

The company said that it had signed a memorandum of understanding with Bharti and would finalise a detailed business plan over the next two months.

Wal-Mart and Bharti are racing against Reliance, the largest non-government owned company in India, to establish an early presence in the new market. Reliance has begun to roll out what it says could add up to 6,000 supermarkets across the country.

Tesco has set "becoming an international retailer" as a strategic aim and says it will continue to assess ways to enter the Indian market, but its set-back there piles more pressure on its forthcoming launch in the US.