New Delhi, India Wal-Mart Stores could potentially open hundreds of stores in India if the country opens up the sector to foreign direct investment, the chief of its Indian joint venture told Reuters on Thursday.
India's $450 billion retail sector is largely closed to foreign firms and favors small mom-and-pop stores, which provide livelihoods for hundreds of thousands and serve a market of more than 1 billion, said the report.
"If the laws of the country change to opening of FDI in retailing, we could open hundreds of stores," Bharti Wal-Mart managing director and CEO Raj Jain said. "It is essential that FDI in retail opens up, because then we can open our own stores and carry the product in hygienic, safe conditions not only at the farm-gate but also right up to where the consumer buys from us."
Earlier this month, the government took a tentative step toward opening up of the organized retail sector to foreign companies by putting out a discussion paper but steered clear of suggesting changes to the investment cap.
Currently there is a cap of 51% foreign direct investment in single-brand retail outlets, while retailers that carry multiple brands are restricted to cash-and-carry or wholesale outlets such as the ones Wal-Mart operates in India.
Bharti Wal-Mart operates wholesale stores in India under the Best Price Modern Wholesale brand, and has so far opened two stores. The joint venture expects to open 10-15 such stores over the next three years.
Separately, the number of retail stores operated by Bharti Retail would go up to 140 by the end of 2010, from the current 80, Jain said.
When asked by Reuters whether Wal-Mart would continue with the joint venture partner Bharti if the government relaxed foreign investment in retail, Jain said they would decide depending on what and how the laws would be.