Expansion plans of Walmart in India on backburner

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.