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July 6, 2009

INDIA: Wal-Mart venture backs deregulation

Opening up India's retail sector to more foreign investment will be an “engine of growth” for the local economy, according to Bharti Wal-Mart, the US retail giant's venture in the country.

Opening up India’s retail sector to more foreign investment will be an “engine of growth” for the local economy, according to Bharti Wal-Mart, the US retail giant’s venture in the country.


The prospect that multinationals could soon be able to invest further in India grew on Friday (3 July) in the wake of a key government report that stated the ban on foreign companies being able to own and open food retail stores in the country should be scrapped.


India is seen as an attractive overseas market for international retailers but, at present, non-Indian firms are forbidden from owning multi-brand retail outlets, although the likes of Wal-Mart and Tesco have formed wholesale cash-and carry ventures with local players.


However, the publication of The Economic Survey 2008-09, prepared by India’s finance ministry, has given the world’s top retailers grounds for optimism.


A spokesperson for Bharti Wal-Mart said India now had a “progressive” government in place and that the business, formed only a matter of months ago, is “optimistic” economic reform will take in place.


“Retail can be an engine of growth not just in urban India but also in Tier II and Tier III towns offering more job opportunities and helping families to save money so they can live better,” the spokesperson told just-food today (6 July). “FDI in retail can only help accelerate this process.”


Metro Cash and Carry, the wholesale business of German retail giant Metro Group, runs five outlets in India. In 2008, the stores generated EUR120m (US$166.8m) in sales and, although a spokesman for the business insisted Metro currently has no plans to open consumer-facing retail stores in India, he said the company was looking forward to further reform of the sector.


“We are working closely together and in a constructive way with the authorities in order to improve the overall market conditions,” the spokesman said.


“We hope [deregulation will take place] as soon as possible. But India is a huge and very fragmented country and the process of decision-making sometimes lasts longer than in other markets.”

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