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Wal-Mart in India

‘In most countries, supermarket chains create and manage well-oiled supply chains to
offer consumers lower prices and dampen inflationary trends. Inflation in India is
touching decade-highs. But then it’s a fallacy that in India it is always about low price’.
Companies like Tata, Birla and Reliance have all attempted to enter food-and-grocery
retailing in India with mixed success. Will Wal-Mart’s supply chain work in India?

Contents

1. Introduction – Wal-Mart’s first store in India


2. Joint venture with Bharti Enterprises
3. About Wal-Mart
4. Wal-Mart – Background Note
5. Wal-Mart – Timeline
6. Wal-Mart – Quick Facts
7. The world’s largest retailer isn’t new to India
8. India’s first special skills training centre
9. Exhibit – Wal-Mart’s business model in India
10. Mera Kirana programme
11. Exhibit – Foreign hypermarket chains in India
12. Wal-Mart Internationally
13. Exhibit – Wal-Mart and Expansion into International Markets
14. Wal-Mart’s imperfect success record in a foreign country
15. Cost-Leadership Strategy- Wal-Mart’s core philosophy – EDLP (every day low
prices)
16. Will Wal-Mart succeed in expanding outside the U.S.?
17. Best Practices and lessons from the International Markets
18. Wal-Mart India – Plans and Challenges
19. Wal-Mart’s Strategy and Supply Chain tuning for India
20. Physical and Regulatory Challenges
21. The Indian Consumer
22. Bringing private label suppliers to India
23. Will the kirana store go out of business?
24. Advantages of a small Indian shopkeeper – The Kirana store
25. Exhibit: Wal-Mart – Store Formats
26. Exhibit: Wal-Mart – International operating formats
27. Questions for Discussion

"India is a price sensitive market and therefore we will be devising our strategy for her
very carefully…Retailing is like a game of three dimensional chess where we operate as
a local, regional and global player, so depending on the needs of the market we shall
change our format and adapt." – John B Menzer, President and CEO, Wal-Mart
International.

"India is not a homogeneous market, so ours is not a cookie-cutter approach from the
U.S. …Wal-Mart is in no hurry to unfurl the Wal-Mart flag nationally. The easiest thing
is to roll out stores, but the most difficult is to sustain and feed them." -Raj Jain,
President of Wal-Mart India in May 2009.

"Wal-Mart operates with multiple private brands around the world. In each market that
we operate, we look to be local. We treat each market as unique and India, in this
respect, is no different." -Arti Singh, vice-president of Corporate Affairs at Bharti
Wal-Mart.

1. Introduction – Wal-Mart’s first store in India

In December 2006, Wal-Mart Inc. believed that by the year 2015, 35% of India’s retail
sales could be from chain stores . This was a radical increase from the prevailing 2%. In
May 2009, Wal-Mart was ready to open its first store in India. The reason for Wal-Mart’s
entry in India was clear – The Indian middle class . The world’s biggest retailer had been
silently working on its strategy for India for around two years. Mom-and-pop stores and
traditional distribution networks dominated the $375 billion Indian retail market. Wal-
Mart’s first outlet was set to launch in the city of Amritsar, Punjab in North India. The
first store air-conditioned and built over 50,000 sq. ft. was on the outskirts of the city,
Amritsar. The store employed 200 locals and was likely create 500 indirect jobs. In the
first few weeks itself, the company had managed to sign on close to 35,000 members.
However, the debut outlet was not to carry the familiar Wal-Mart brand. Did this mean
Indian consumers could not benefit from Wal-Mart’s everyday low prices?
Download PDF file to read more.
Case Updates/Snippets

• 50:50 joint venture: In India, Wal-Mart has a 50:50 joint venture with Bharti
Enterprises in the wholesale cash-and-carry segment.
• Direct Farm Program: Multinational retail giant, Wal-Mart’s Direct Farm
Program in India is a partnership with 110 small and marginal farmers near
Ludhiana in Punjab where it encourages cultivation of safe, high-quality, seasonal
vegetables. Farmers are advised at every stage of cultivation by field agronomists.
Farmers learn about nursery management, transplanting, nutrient management, as
well as harvest and post-harvest practices.
• Wal-Mart India in 2010: In 2010, Bharti-Wal-Mart plans to launch seven Best
Price Modern Wholesale Cash-And-Carry stores across India. These stores will be
100,000 sq ft in size and each store will involve an investment of $6-7 million.
• Sourcing from India: Wal-Mart has a large sourcing business in India. The retail
major sources goods worth $125 million a year from Punjab. In 2010, Wal-Mart
is planning to increase sourcing from India to strengthen its global business.
• Preference for Kirana/local retailers: According to a survey by ASSOCHAM in
early 2010 in which it interviewed 5000 shoppers in various cities in India, kirana
stores (mom and pop stores) and local retailers were the preferred destination for
shoppers as compared to shopping malls. The survey found that goods were less
expensive (as much as 25%) in local kirana stores as compared to big shopping
malls. Smaller stores also offered more variety and affordable options with
sustainable quality at a negotiable price (reduced margins).
• Training centers: Inheriting a model from its U.S. parent, Bharti-WalMart (Best
Price Modern Wholesale) intends to set up its own training centers to train less-
privileged youth to work in retail stores.
• FDI in retail in India: In India, the Government presently does not allow foreign
investment in multi-brand retail. It allows 51% FDI in single-brand retail and
100% in wholesale venture. In 2007, Walmart Stores and Bharti Enterprises
entered into a joint venture and began cash & carry stores under the brand Best
Price Modern Wholesale.

Tags: India, Retail, Wal-Mart


BY CASE AUTHOR IN BUSINESS STRATEGY, CASE STUDY ON FEBRUARY 11,
2010

Wal Mart Case Study Part 1 & 3 - Presentation Transcript

• Wal-Mart Case Study http://walmartstores.com/AboutUs/7603.aspx


• Introduction http://walmartstores.com/AboutUs/7603.aspx
• Wal-Mart’s Forty-six Year History
o 1960s:
• Sam Walton opens first discount store in Rogers, AK
• 24 stores in Arkansas with $24 million in sales
• Two stores open outside of Arkansas in Missouri and
Oklahoma
• Wal-Mart is incorporated
o 1970s:
• Home office and Distribution Center opens
• Company is listed on the Hew York Stock Exchange
• Acquires 16 Mohr-Value stores and Hutcheson Shoe
Company
• 276 stores, 21,000 employees, and $1.248 billion in
sales

• http://walmartstores.com/AboutUs/7603.aspx
• Wal-Mart’s Forty-six Year History (cont.)
o 1980s:
• Sam Club opens and Largest distribution center opens
to-date
• Acquires Kuhn’s Big K, Grand Central Shoes, and
Woolco stores
• Forbes magazine ranks Wal-Mart #1 retailer for eight
years straight
• 882 stores, 104,000 employees, and $8.4 billion in
sales
• Wal-Mart Satellite Network (largest private satellite
communication in U.S. linking all facets of company operations)
• Celebrates 25 th anniversary
o 1990s:
• Opens stores in Mexico, Puerto Rico, Canada,
Argentina, Brazil, Germany and England
• Acquires Western Merchandisers, Pace Warehouse
Clubs, Woolco, Interspar, Wertkauf, and ASDA Group
• 1,995 stores, 1,140,000 employees, 239 super-centers,
433 Sam’s Club, 276 international stores, and $105 billion in sales
• http://walmartstores.com/AboutUs/7603.aspx
• Wal-Mart’s Forty-six Year History (cont.)
o 2000s:
• Fortune magazine ranks Wal-Mart 5 th “Global Most
Admired All-Stars”
• Hispanic Business magazine ranks Wal-Mart in “Top
25 Diversity Recruitment Programs”
• Owns 95.1% share in Seiyu stores, Japan
• 6,200 facilities globally, 1.6 million employees, and
$345 billion in sales
• Joint-venture with Bharti Enterprises, India – est.
Bharti Wal-Mart Private Limited
• Opens stores in Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, and South Korea
• 3,000 th international stores opens in Sao Paulo, Brazil
• http://walmartstores.com/AboutUs/7603.aspx
• CIO Affecting Change Wal-Mart’s Affect on the Retail Industry
http://walmartstores.com/AboutUs/7603.aspx
• CIO/Wal-Mart Affects Industry Change
o Sam Walton distrusted information technology
o Chief Information Officer: Rollin Ford who also serves as the Executive
Vice President of Logistics and Supply Chain, takes command in 2006
• Implemented radio frequency identification (RFID)
for all products distributed to Wal-Mart and Sam’s Club stores
• Raised the standard for vendors and suppliers through
global supply chain transformation
• Companies that do business with Wal-Mart must
operate on the RFID global supply chain concept of Wal-Mart
• Rollin’s and Wal-Mart’s innovate use of information
technology raise retail industry standards for excellence and efficiency
• http://walmartstores.com/AboutUs/7603.aspx
• Wal-Mart Specific Questions
• Wal-Mart – Software Development
o Wal-Mart has a team of developers to create most software needed by
the company.
o Before the development of every software, the developers works on the
functional areas that will be affected by it.
• Should Wal-Mart continue to rely on developing its own software?
o Big companies such as Wal-Mart need very specific software which
probably will not be available on the market.
o The best way to develop a software that exactly meets the
company's requirements is to use in-house development.
o With in-house development, the maintenance will be easier since the
knowledge used to create the software is kept within the company.
o Wal-Mart does not want to be help hostage by the software vendor.
o Adjustments on third party companies can be more expensive than in-
house development for applications with the complexity demanded by Wal-Mart.
• What are the benefits and costs to having developers work in a functional area
before creating its own software?
o Most software developments are targeted to make user's life
easier or to speed up tasks.
o The best way to develop a software is to understand the user's
need.
o If the developer works in a functional area he will understand most of
the requirements of the software.
o The additional days that the developers worked on the functional area
will be compensated with the lesser need of adjustments and maintenance in the future.
• Wal-Mart - Current and Future Trends and Technology
o Wal-Mart is known to be always on the leading edge of the technology
• Why are some people upset about RFID tags? Are their fear justified?
o The main issue raised about the RFID is privacy. Some people fear that
the RFID can be used to farther away than its intent.
o RFID items can be read after the item leaves the store. Then, RFID
scanners could also be used to scan all items someone have at their home that uses the
RFID technology.
o Lewan describes in his article that Mark Rasch, former head of the
computer-crime unit of the U.S. Justice Department, states that there is a possibility of
unauthorized people learning about who you are, what you have bought, how and
where you have bought your items.
o Mark Rasch adds that thieves can scan car trunks, garages and offices
from a distance.
o In addition, he mentions that even third party companies and the
government can use to learn about you.
o These statements strongly support any fear of the uncontrolled use of
this technology.
• What does the UCCnet project do and why it is so important to retailers?
o UCCnet is a subsidiary of the Uniform Code Council that provide a way
of companies to register item data and share standardized information between their
vendors.
o Companies, such as the Wal-Mart, have systems that maintain their
inventory and connect with the products suppliers alerting when a product needs to be
shipped.
o Most companies use different set of data for their products. The UCCnet
provides an industry-wide standard for data, making possible the integration of
different systems.
o Without this synchronization, it would be extremely difficult to connect
two company's systems.
• Why did Wal-Mart stop selling some transaction data and will it affect the
company in the future?
o Wal-Mart sold its transaction data to companies, such as drug
manufacturers, in 2001.
o Wal-Mart saw that the competitors were taking advantage of this data.
o Since, this information was more valuable to competitors than the price
that Wal-Mart was charging, the Wal-Mart decided to stop this data.
o This should not affect the Wal-Mart, since it is a very big company and
the money they made selling transaction data was only a fraction of their income.
• What is the role of Wal-Mart's Web site? Is it a useful tool?
o The role of Wal-Mart's Web site is to follow the technology
trends with the e-commerce.
o Wal-Mart's website is useful since many users can buy products
directly through the website or search for items that he might need on the next visit to
the store.
o The website is being so used, that on 2006, the website suffered from
visitors overload on the Black Friday.

UNETHICAL ISSUES :
UNETHICAL ISSUES USA BASED RETAIL COMPANY

BACKGROUND NOTE :
BACKGROUND NOTE In 1962, Sam Walton (Walton), along with his brother Bud
Walton established the first Wal-Mart store in Rogers, Arkansas, US. When he
established the first Wal-Mart retail store, many people told him that operating a discount
store in a small town would not be profitable enough in the long run. However, Walton
strongly believed in his business model. Ignoring the critics, he continued to focus on
providing good service to customers through his retail stores. Walton understood the
importance of building good relations with both employees and customers. He relied on
three basic principles to build his retail business: Respect for the individual, Service to
customers and Strive for excellence. Thanks to this people-centric philosophy, Wal-Mart
registered sales of $ 1 million within one year.

Slide 3:
By 1967, Walton had established 24 Wal-Mart stores, which had combined sales of $
12.6 million. This success prompted Walton to expand Wal-Mart operations to other
places. Over the years, Wal-Mart expanded its operations to many US states and other
countries. From the very beginning, Walton laid down two rules that guided Wal-Mart
associates (hourly employees were called 'associates') through their work. The first being
'The Customer is always right,' and the second being 'If the customer happens to be
wrong, refer to rule No 1.' He encouraged associates to discuss problems openly and
created a highly participatory, entrepreneurial and goal oriented environment. Wal-Mart's
manpower policies encouraged its employees to make decisions, take risks and even
commit mistakes in the cause of customer service. Walton formulated a mission for his
associates 'get them, keep them and grow them.' Walton described his relationship with
his employees as a 'partnership'...

WAL-MART IN TROUBLE :
WAL-MART IN TROUBLE The beginning of the 21st century brought with it a spate of
problems for the world's largest retailer Wal-Mart. The company found itself facing one
of the biggest lawsuits ever in the history of the US. In June 2001, a former Wal-Mart
employee, Betty Dukes (Dukes), had filed a case accusing the company of 'sex
discrimination in promotions, training and pay.' Many more employees joined Dukes, and
by May 2003, the case had taken the shape of a class action suit. after the plaintiffs asked
a Federal Judge to allow the case to proceed on behalf of more than 1.5 million women.
Wal-Mart had for long been accused of not treating its female employees in a socially
responsible manner. A study of Wal-Mart's own employee data (conducted by some
experts hired by the plaintiffs) revealed that women had been discriminated against in
many instances. Even the company's internal memos revealed that Wal-Mart was far
behind its competitors in promoting women at the workplace. Industry observers said that
the company's competitors had employed more female managers in 1975 than Wal-Mart
did even in 1999

Slide 5:
Apart from the sex discrimination case, Wal-Mart was also accused of breaking Federal
laws that protected the freedom of association of workers. Wal-Mart faced lawsuits (filed
in more than 30 states in the US) that accused it of breaking many Federal overtime laws
(in some cases, company managers locked stores to prevent workers from leaving the
premises). On November 21, 2002, thousands of protestors took to the streets in 40 US
cities protesting against Wal-Mart's treatment of employees. Commenting on the situation
Wal-Mart was in, Kyle Johnson, Project manager at Domini 400 Social Index, a US
based socially responsible investment fund, said, "Wal-Mart is a market leader in retail,
yet has not taken a leadership position on labor issues and has been unresponsive to calls
for change from shareholders”

Slide 6:
Meanwhile, Wal-Mart categorically denied that its labor practices were unethical and
illegal and that its employee hiring and promotional practices were biased. The company
dismissed the lawsuits as baseless and said that the litigation was nothing but a ploy to
squeeze money out of it.

ALLEGATIONS AGAINST WAL-MART :


ALLEGATIONS AGAINST WAL-MART The June 2001 the sex discrimination case
filed by Dukes covered all female employees of Wal-Mart retail stores in the US. Wal-
Mart was charged with discrimination against its female employees in compensation,
promotions and job assignments in violation of Title VII of the Civil Rights Act of 1964
(Title VII) . The plaintiffs alleged that Wal-Mart mistreated women in various ways: they
earned much less than their male counterparts even when they had more experience than
men or performed better than them. The case also alleged that Wal-Mart prevented
women employees from advancing by » Prohibiting them from working in departments
that were traditionally assigned to men (and often paid more)...

TAKING A CLOSER LOOK :


TAKING A CLOSER LOOK According to the employees suing the company, Wal-
Mart's culture and environment were inhospitable to women. The company had
reportedly held on to its traditions, including those that made women uncomfortable. For
example, the company organized annual quail hunting (a practice introduced by Walton)
for only a small group of top managers. Few women, who worked in the lower executive
ranks, were also invited. At one point of time, some women suggested that an activity
other than hunting would allow more people to participate. The idea was rejected on the
grounds that it would interfere with the company's tradition. There were also instances
where women executives were forced to go to Hooter's restaurants (known for the
titillating dress and behavior of their waitresses) and strip clubs in the course of business
events. Moreover, female employees at Wal-Mart were reportedly given fewer
promotions than male employees...

OTHERS ALLEGATION AGAINST WAL-MART :


OTHERS ALLEGATION AGAINST WAL-MART Wal-Mart was criticized for several
anti-employee practices other than gender discrimination. In June 2001, employees
accused the company of failing to record extra hours of work, altering time records, and
preventing them from taking rest breaks in violation of federal labor laws A lawsuit filed
by Taylor Vogue and Sally Mussmann in June 2001, on behalf of Wal-Mart employees,
stated that, "Wal-Mart gives its employees work assignments impossible to complete
within scheduled hours, and then pressures the workers to complete them anyway
through intimidation and threats of adverse employment consequences. At the same time,
the staffers are prevented from clocking in extra hours worked." However, Wal-Mart
denied the above allegations. Bill Wertz, Wal-Mart's corporate spokesman, said, "The
allegations here are completely contrary to Wal-Mart policy. This is an issue that Wal-
Mart feels strongly about." Defending its stand, the company spokesperson said that Wal-
Mart required employees to take permission from the management before working
overtime...

CONCLUSION :
CONCLUSION HRM of any organisation is accountable for such type of unethical
issues. In this case we can conclude discrimination between sex is unethical as well as
against of human behaviour. Any organisation should not take any descison against law.
Human resource manegment should respect individuals.

PRESENTED BY- :
PRESENTED BY- SANTOSH KUMAR
Wal-Mart and Bharti: Transforming
Retail in India
by Indranil Bose, Shilpi Banerjee, Edo de Vries Robbe
18 pages. Publication date: Aug 27, 2009. Prod. #: HKU845-PDF-ENG

On 27 November 2006, Bharti Enterprises Ltd ("Bharti"), one of India's principal


business groups, and American retail giant Wal-Mart Stores Inc ("Wal-Mart"),
entered into a joint venture with equal partnership for both companies. The
partnership would give Wal-Mart access to the highly regulated Indian retail
market, which was valued at US$320 billion. Bharti would own retail shops under
the Wal-Mart franchise and the companies would jointly operate in areas of the
Indian retail industry which were accessible for foreign investment, such as
logistics and cash-and-carry. This partnership between the US retail giant and
one of India's most successful corporate houses was expected to bring a dose of
modernity to the Indian retail landscape. It could be questioned, however, how
Wal-Mart would cope with the opposition it faced from local shop owners and civil
rights groups given its poor reputation with regard to social responsibility. In
addition, the state of the country's transportation network was very poor and the
question remained how Wal-Mart planned to implement its supply chain
management model in India.

Source:
http://www.thehindubusinessline.com/2010/10/27/stories/2010102751230700.htm
Bharti Walmart sees rich harvest for farmers from higher buys
To set up skill development centre in Bangalore.

Making a strong case for 100 per cent FDI in multi-brand retail, Mr Duke said it would be a huge opportunity

for the country

— Kamal Narang
New alliance: The Union Minister for Food Processing Industries, Mr Subodh Kant Sahai, flanked by Mr
Mike Duke, President and CEO, Wal-Mart Stores Inc (left), Mr Rajan Bharti Mittal, President, FICCI and
Vice-Chairman of Bharti Group, and Mr Harsh Pati Singhania, former president, FICCI (right), during an
interactive meeting organised by

Our Bureau New Delhi, Oct. 26

Bharti Walmart, the 50:50 joint venture between Bharti Group and Wal-Mart Inc, plans to source agricultural

produce directly from 35,000 small and medium farmers in India by the end of 2015. The joint venture is also

looking to set up its third skill development centre in Bangalore.

“We will buy from 35,000 farmers directly by 2015. I am confident that these initiatives would result in a 20

per cent increase in the income of farmers and would have a multiplier effect to benefit one million farmers,”

Mr Michale T. Duke, President and CEO, Wal-Mart Stores Inc, said an interactive meeting with Indian

industry leaders organised by FICCI here. At present, the company works with 600 farmers in the country.

Making a strong case for 100 per cent foreign direct investment in multi-brand retail, Mr Duke said FDI in

retail will be a huge opportunity for India. “We can contribute more, if FDI in retail is opened up. We can

contribute much more by way of infusion of capital, accelerate the opening of more retail stores and bring in

overall efficiency in supply chain management.”

“I believe that retail FDI would go a long way in reducing food inflation in India by 50-70 basis points by

reducing waste and improving the efficiency of the business model through supply chain management,” Mr

Duke said, adding that the joint venture will open another cash- and-carry venture in next 45 days.

Commenting on the need for skill upgradation in the retail sector, he said the venture would add a third skills

training centre in Bangalore in a couple of months. The Bharti Walmart association currently has two training

centres, at Amritsar and Delhi, in partnership with the respective State governments.

“The target is to train 35,000 students in the next five years and place at least 15,000 students in the next

five years,” Mr Duke said.

He said 34,000 people had received certification under the programme and 1,100 placed in jobs.

Mr Subodh Kant Sahai, Union Minister for Food Processing Industries, appealed to industry to set up a

parallel agriculture and food processing industries and invest 5 per cent of its turnover in the business. This

would encourage corporates to help farmers increase their yields and take to market-driven farming

practices.

The Minister released a FICCI report on ‘Corporate Intervention in Indian Agriculture: Towards a Resilient

Farming Community'. The meeting was also addressed by Mr Rajan Bharti Mittal, President, FICCI; Mr P.M.
Sinha, Chairman, FICCI Agriculture Committee and Mr Antonio Helio Waszyk, Chairman and Managing

Director, Nestle.
Related Stories:
Bharti Wal-Mart ready for multi-brand retail; pushes for easier norms
Bharti Wal-Mart opens first farm co-op centre in Punjab

More Stories on : Brands | Agriculture | Human Resources

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Source: http://www.business-standard.com/india/news/qa-raj-jain-mdceo-bharti-
walmart/400861/
Raj Jain wears two
Q&A: Raj Jain, MD & CEO, Bharti Walmart
hats, as President of
Walmart India and
'A central regulator for the retail sector won't work'
Managing Director
Business Standard / July 9, 2010, 0:17 IST
& CEO of Bharti
Walmart, the cash-
and-carry joint venture. In an interview with Business Standard,
he dwells on the points raised by a government discussion paper on allowing foreign
investment in multi-brand retail, and discusses plans on cash-and-carry. Edited excerpts:
Have you started preparing the blueprint for rolling out Walmart India stores

, now that the government has released the discussion paper?


It is still a discussion paper. But it does prepare sufficient ground for entry into multi-
brand retail, with a very relevant tone and tenor.
Is majority holding in the Indian venture a pre-condition for Walmart’s entry into
the market?
No. Our position would be that the government should open it fully (allow 100 per cent
foreign investment). However, we fully understand that the government wants to adopt a
calibrated approach, as it has in other industries such as telecom. We are willing to work
with the government and demonstrate the benefits of modern retail to the country
Will you be comfortable with less than 26 per cent stake, given the rules in India?
Allowing less than 26 per cent is like not opening at all. Shareholding below 26 per cent
does not give any rights. I am sure the government is cognizant of that. The question will
be between a 100 per cent, a 51 per cent and 49 per cent and, may be, 26 per cent. But
nowadays, the difference between 26 per cent and 49 per cent is hardly anything.

On a calibrated approach, the government also wants multi-brand retail chains set
up through the help of foreign capital to open stores only in cities with a population
of one million or more. Is such an approach an impediment?
Yes, it is. There are only 42 or 43 cities above the one million mark. So, it reduces the
landscape to a significant level. One million is a very high number. Also, getting real
estate in these large towns is a big challenge. Once you develop a back-end infrastructure,
which the government wants us to do, then you have to spread it in the same geography,
as much as possible, because India is a very large country. Our own preference and
recommendation would be 100,000. If that is considered too low, then 500,000 is
probably a good number.

Is it a good idea to give you rights to operate in certain states, say, Punjab, Haryana
and Delhi, which will be like a circle in case of telecom?
It makes business sense. Walmart may want to do things in the North, while our
competitors may want to focus on the South. But I don’t know if it makes legislative
sense, because we are not a federally-run country. We need to have the same law for all
states. A regional approach makes better sense because it is very difficult to develop
infrastructure everywhere: it takes a lot of time, effort and money to do it.

There is also a suggestion in the discussion paper to put in place some norms on
sourcing. Is that an impediment, too?
For our current businesses of supply and cash-and-carry, we are sourcing almost 90 per
cent of our products locally. So, it’s not that it’s a big issue. It also helps develop the
local supply base, not just for India but global.

There is a suggestion to allocate half the inflow in creation of infrastructure. In the


initial years, do retailers like you invest more or less than what has been suggested?
In the initial years, it could actually be higher. It depends on the country and the level of
infrastructure. In India, infrastructure is relatively not so developed. So, 50 per cent or
thereabouts would probably be a good figure. But rather than mandating investment in
the back-end, the government could look at some other parameters also, to ensure serious
players are there in the market. It is a bit like opening the auto industry: you don’t direct
that you have to necessarily put factories. You can’t make an automobile without a
factory and you can’t run an automobile business without a factory. Whereas, a lot of
attention gets focused on front-end stores, no global retailer can be successful unless it
has a very strong back-end.

What do you make of this suggestion in the discussion paper that retailers may be
asked to seek permission from a central regulator for opening every outlet? Doesn’t
it look like macro-management?
I don’t think it will work in our country. It is like going back to the 1940s or the fifties. A
central regulator is not required. For opening any store, there are 30 licences required.
Those are, by-and-large, given by the state government. So, it should be mandated to the
states to put in place an appropriate regulatory mechanism, a single-window one.

As a global player, don’t you also want comfort from the states that they will not
clamp down on certain chains or on organised retail as a whole?
Yes, of course. But as we have seen in manufacturing and other sectors, states which do
discourage modernisation, foreign investment or progress, tend to suffer and those
governments probably do not stay in power for too long. The democratic process will
take care of this. We don’t need any specific assurance to that effect.

How many cash-and-carry stores should we expect from you in the coming months?
We will open about 10-12 cash-and-carry stores in the next 12 to 18 months. Work is
under way on all these sites. These will be all over the North and some in the South.

How much revenue have you started generating from India?


It’s very difficult to say.

Has your total sourcing from India reached the $1-billion mark yet?
No, not yet.

Source: http://business.rediff.com/report/2010/aug/12/bharti-walmart-seeks-49-pc-fdi-in-
retail.htm

Bharti Walmart seeks 49% FDI in retail


August 12, 2010 15:56 IST

C onsidering the political sensitivity over full-scale opening of foreign direct investment in multi-
brand retail, the government should initially allow only 49 per cent foreign investment, according to Bharti
Walmart.
In its comment on the industry department's discussion paper on foreign direct investment in multi-brand
retail, the joint venture between Bharti Enterprises and Walmart, said though 100 per cent foreign direct
investment should be allowed in the sector, it would endorse a calibrated opening.

"Bharti Walmart recognises. . .the political sensitivity around the retail sector. Recognising the government's
stand to adopt a calibrated approach, we would endorse a position where as a first step, multi-brand retail is
opened up at 49 per cent," the company said.
"Should the government pursue this option, there should be a clear path towards 100 per cent FDI in near
future," it said, adding foreign investment without any restrictions would create the conditions for the greatest
flow of investment to the back-end with related benefit for farmers, small businesses and consumers.

The government has taken a tentative step to open the sector, which employs 34 million people, to global
players with the Department of Industrial Policy and Promotion releasing a discussion paper on the issue.

As per estimates, India [ Images ] loses fruits and vegetables worth thousands of crores of rupees annually
due to lack of proper cold chains and back-end infrastructure. Bharti Walmart runs wholesale cash and carry
stores in India under the 'Best Price Modern Wholesale' brand.

On the DIPP's query of who should be allowed to bring in FDI in the sector, Bharti-Walmart said it was 'fairly
easy' to identify genuine global players. However, "in case a mandate is absolutely necessary, a minimum
threshold limit of $100 million be fixed for the food category," it said.

The joint venture firm also suggested that global players entering the sector should source more than 50 per
cent of their goods locally to develop India's industry.

It also favoured that FDI in retail should be permitted in the 200 cities with a population of more than
200,000 and not only in cities with about 40 lakh (4 million) population.
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