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NEW DELHI, India -- Bentonville, Ark.-based Wal-Mart Stores, Inc. has finally found a way into the Indian wholesale market. The global retailer yesterday signed a pact with Bharti Enterprises Ltd. here to create a joint venture that allows it to supply goods -- including groceries -- to smaller retailers, manufacturers, and farmers.
While Indian laws don't allow foreign multiple-brand retailers like Wal-Mart to sell directly to the end consumer, they do permit them to run wholesale operations and provide back-end support to Indian retailers.
"This is very significant for Wal-Mart because it is the formal entry of Wal-Mart in India into the cash-and-carry (or wholesale) business," said Raj Jain, country president for Wal-Mart operations in India.
The 50/50 joint venture, known as Bharti Wal-Mart Pvt. Ltd., is for cash-and-carry or wholesale, supplying goods to smaller retailers, manufacturers, and farmers. It will also carry out back-end supply-chain management operations, the companies said in a joint statement.
Bharti Wal-Mart will also supply retailers like Bharti Retail, a unit of Bharti Enterprises that is setting up a separate wholly-owned chain of retail outlets in India.
Bharti said in February that its retail arm would invest $2.5 billion by 2015 to establish multi-format retail stores in India employing about 60,000 people, according to a Dow Jones Newswires report.
Wal-Mart has been procuring goods from India since 2001. The retailer reportedly said it might also turn its local wholesale suppliers into global suppliers.
The Bharti Wal-Mart joint venture was first announced in 2006 but ran into opposition from a key ally of India's ruling coalition government, the Communist Party of India (Marxist), on fears it would harm the livelihoods of millions of small shop owners.
Bharti Wal-Mart said it plans to launch its first wholesale store by the end of 2008, opening up to 15 such facilities over the next seven years, employing about 5,000 people. A typical facility will sell goods ranging from fruit and groceries to electronics and home appliances.