Wal-Mart has received the Indian government’s permission to set up offices in Delhi and Mumbai to explore business opportunities in the country. India has not yet opened its doors for FDI in the retail sector. However, this may be seen as a positive signal that it may relax regulations in the near future.
The Wal-Mart offices are expected to study and formulate market strategy, identify Indian partners to facilitate entry in to India and uncover other investment opportunities for the company.
The Delhi and Mumbai offices are also likely to undertake sourcing from Indian suppliers for the retailer. A number of international retailers, including Wal-Mart, May’s and Tesco, source low-priced items from Indian suppliers for sale in their home markets.
These offices will start operations by October-November 2006, and will be handled by Wal-Mart’s Hong Kong and Singapore regional offices.
The Indian government allows foreign direct investment of up to 51% in single-brand retail ventures. However, it has been speculated that there will be a further relaxation in retail FDI norms, which will enable multi-brand retailers like Wal-Mart and Tesco to enter India.