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FDI in retail: Walmart firms up India strategy, to launch first store in 18 months

Walmart, the world's largest retailer, is firming up plans to open its first store in India in about 18 months from now, boosted by the government's move to allow FDI in retail.

BT Online Bureau   Hyderabad     Last Updated: September 27, 2012  | 12:46 IST

Walmart, the world's largest retailer, is firming up plans to open its first store in India in about 18 months from now, boosted by the government's move to allow foreign direct investment (FDI) in retail.

Walmart India President and Bharti Walmart MD Raj Jain has said they would firm up their retail strategy in the next 30 to 45 days. "It is too early to share any details. Over next 30 to 45 days we will clear our plans and share with the media," he said.

Raj, however, said they would have to study the FDI policy in detail as the government wanted a separate company to make an application to Foreign Investment Promotion Board (FIPB).

"The policy announcement on retail is only nine days old. It is too early to share information like how many stores we will be opening. We are working on that," he said.

"It normally takes 12 to 18 months after you start planning opening a retail store. Our thinking is that it will take 18 months for us to be able to do that," Raj said, after launching a Bharti Walmart Best Price store in Hyderabad.

"We are very positive and happy with the policy. I think it is a good way to start the operations. Once you demonstrate you are adding value, you are here to stay, making investment, bettering lives of customers as well as suppliers, I am sure lot of governments will embrace this investment because everybody wants jobs, investment and prosperity," he said.

Bharti Walmart, a 50-50 joint venture between Bharti Enterprises and Walmart Stores Inc, now has 18 wholesale stores in the country.

When asked if the two companies will have the same equity holding for their foray into retail stores, Jain said: "We will have to see. There are a lot of options. We need to discuss them."

Raj did not believe that they have to wait for other states to open retail for FDI.

"I think there are enough (eight) states which have agreed. Big states like Maharashtra and Andhra Pradesh have expressed their willingness to allow FDI. I think these states are big enough to start our operations," he added.

On the central government leaving it to states to allow FDI, Raj felt it is a calibrated and cautious approach in view of the concerns expressed by some political parties.

"The government is asking companies like us to demonstrate that we can make a meaningful difference to the lives of consumers and farmers. It is a good challenge. We accept that challenge. Once we demonstrate that it has no negative impact on small shop owners, other states will open as well."

He also indicated that their first retail store could come up in Andhra Pradesh. "Andhra is a progressive state. It is a very large market and a large agrarian society. We will invest in backend in Andhra, will integrate back with farmers and manufacturers and bring their products both in retail and wholesale stores," he said.

Raj denied that they were unhappy with the government's condition of bringing $100 million fresh FDI in the first three years, half of it into back-end infrastructure. "We are happy with the announcement. We are very willing to make these investments," he remarked.

On the government's conditional retail sales outlets be set up only in cities with a population of more than 10 lakh, he admitted that this would restrict them to few cities in every state.

He identified the huge cost of real estate in large cities, inefficient supply chain and training people as the three major challenges for the retail industry.

With inputs from IANS

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