Expansion plans of Walmart in India on backburner

Expansion plans of Walmart in India on backburner

For years Walmart tried everything to get a foothold in India, but now it seems the company will have to put its plans on the backburner. According to multiple sources the first new location will open in 2016 - at the earliest.

Doubts about India…

Last year, when India finally agreed foreign companies could keep the majority of shares in their Indian operations, Walmart made it no secret the distributor wanted to conquer India as soon as possible. The Americans said their first new retail store would "open within two years".

 

Two sources at Walmart now tell the biggest business paper in India, Business Standard, chances are slim the group will request the first license for a new store before March 2015. When you know it takes about 12 to 18 months before a new shop is operational, it would mean the first new Walmart will open somewhere in 2016, at the earliest.

 

Walmart is choosing to slow down, because Indian regulations are still evolving – leading to judicial insecurity – and because there are elections in May 2014. They fear the controversial reforms in retail could be undone, causing all made investments to be futile.

 

…about local partner Bharti…

That is not the only problem though, as internally things are not going very well between Walmart and its Indian joint venture partner Bharti Enterprises. There have been rumours Bharti is rethinking its part in the joint venture, because of the big investments and the long delay before those investments will start making them money.

 

When the business paper contacted Bharti, they denied they were thinking about leaving the joint venture. At Walmart, nobody was available for comment.

 

…and about own management in India

And yet another problem is an investigation about possible bribery within the Indian department of Walmart. "Walmart is being investigated for breaking entry rules, bribery”, says Devangshu Dutta of retail consultant Third Eyesight in Bangalore.

 

The departure of Raj Jain, who led Walmart in India for six years, is most likely caused the investigation. He was replaced by Ramnik Narsey, who was in charge of the consumer electronics business of Woolworths in India for fifteen months, until the Australians sold the department to Tata Group.

 

"It will take lot more than a management change to fix things", said Devangshu Dutta though.

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