India Is No Longer A Blip On Walmart's Radar

By Sam Lewis

Ambitious plans for subcontinent expansion dropped by mega-retailer

The world’s largest retailer isn’t doing the gloomy economy of India any favors. Earlier this month, Walmart execs announced it decided to not expand into the market of India, indefinitely suspending plans to open hundreds of its superstores across the country. Accompanying this announcement, Walmart ended its partnership with Bharti Enterprises to own and operate wholesale stores that would sell to other retailers, restaurants, and hotels.

The plans for Walmart in India began in 2007, when the company stated it wanted to open hundreds of stores across India with Bharti. This brought hope to India that it would join China in economic prosperity. However, obstacles like poor electricity, bad roads, and inept government brought frustration onto the endeavor. Scott Price, Walmart Asia’s CEO, said the Indian government requires foreign retailers to buy at least 30 percent of their products from SMBs. Price called this the “critical stumbling block” to opening Walmart in India. India’s retailers do not have to follow this rule, making it difficult for foreign retailers to make money.

However, not all hope has been dashed by Walmart to expand into the subcontinent. India’s national elections are scheduled for next year, and with them come a small hope that policies could change. However, this is unlikely as many critics believe Walmart would flatten many small Indian retailers, and increase unemployment. “I don’t see any big foreign retailers entering the market at least for the next nine months, until after the general elections, when we know what the direction will be of the policy,” says Saloni Nangia, president of Technopak, a management consulting firm in Guragon, India. “It is a wait-and-watch approach for many international retailers who want to be in India eventually.”

Beyond policy, Walmart has additional problems regarding expansion into India. Indian authorities have been investigating if Walmart gave Bharti a $100 million interest-free loan, which could be converted into a stake in the company. This action would violate foreign investment rules, and both parties deny any part of it. Walmart has been cleared of any wrongdoing, but, at least for the time being, it might be in Walmart’s best interest to keep India off its radar.