Wal-Mart To Open 50 More Wholesale Stores in India
Wal-Mart (NYSE:WMT) hasn’t given up on India yet, and now the retailer says that it is planning to open another fifty wholesale stores in the country over the next four or five years. The Financial Times reported Wal-Mart’s announcement Wednesday and highlighted that it came in the same week that the Hindu nationalist Bharatiya Janata party stated its disapproval of foreign direct investment in retail businesses as part of its pre-election campaign. In India’s upcoming elections, the Bharatiya Janata party is expected to win control of India’s government, and Wal-Mart India has closely been watching the developments. However, the country currently has a policy that permits 100 percent foreign ownership of wholesale businesses, and that ruling is not expected to be reversed under a new government.
Wal-Mart has faced significant pushback in India not only because of the country’s strict policies, but also because of its own struggles. The Bentonville, Arkansas-based company Wal-Mart has long been combating India’s current policy that keeps foreign retailers from holding more than 51 percent foreign direct investment, but even after the retailer was given the go-ahead to set up shop in September 2012 after lobbying for six years, its expansion has continued to sit at a standstill. In September 2012, Wal-Mart predicted that it would open its first retail store within two years, but now it’s clear that that goal won’t be realized.
What’s more, as highlighted by The Financial Times, Wal-Mart ended its join venture with New Delhi-based Bharti Enterprises last October when the retailer announced it was dissolving the partnership and buying out Bharti. That put Wal-Mart in full control of its wholesale chain, Best Price Modern Wholesale, but it still has not opened a single new store since then, and some still say that Bharti was fundamental to Wal-Mart India’s success. Over a three year period, the two parties opened twenty cash-and-carry stores in eight states starting in 2009, but once their progress slowed and Wal-Mart was charged again and again with attempt to skirt a ban on foreign direct investment in retail businesses, Bharti showed an interest in getting out of the partnership, and Wal-Mart indulged its wishes.