The Hindu Business Line : No hurdles seen in way of Bharti, Wal-Mart retail plan

The existing FDI guidelines support such an alliance where the arrangements could result in a win-win situation for both companies, according to sources.

The current policy guidelines allow 100 per cent FDI in cash-and-carry wholesale trading through the Reserve Bank of India's automatic approval route.

To take this route, the foreign company has to give a self-declaration that it will not violate the set rules.

Another condition is that the buyer to whom the foreign company is selling must have a sales tax registration.

On the other hand, Bharti Enterprises, being an Indian company, has complete access to the entire retail market without any restriction in terms of investment caps, geographical location and supply and distribution chains.

Thus, the proposed alliance may be workable under two sets of corporate structures, according to experts.

First, Wal-Mart may have a wholly owned subsidiary that would import all the products to be sold by retail stores. But this company cannot undertake retailing. So, another company from the Bharti group without any FDI component could source its supplies from the Wal-Mart subsidiary.

Alternatively, the company that would undertake the imports could also be a joint venture between Wal-Mart and the Bharti group.

This would give Bharti greater control over the supply channel, while Wal-Mart would not have any direct control over the retail store chain without equity participation.

Senior retailing experts said that the existing legal framework does allow such an arrangement.

Paul Merrifield, CEO of Proftiz Canada, said: "Companies like Wal-Mart are too big and too high-profile to risk their reputation by refuting the law of the land. Wal-Mart's entry will only benefit the small retailers and traders in terms of providing them with low-priced products and increase their stock positions."

Reflecting a similar line of thought, Mr Subhinder Singh Prem, Managing Director of Reebok India, said: "Wal-Mart has a huge reputation which it cannot risk. If they had to enter they could have done so five years ago and not waited for the joint venture to happen."

More Stories on : Retailing | Bharti Tele-Ventures Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Wedding industry buzzing with bridal, lifestyle expos

China's Chery eyeing Indian compact car market

NTPC plans power auctions from four new `merchant plants'

CyberMedia acquires 49% stake in US content provider

S Kumars to launch foreign luxury brands

Fossil in 50:50 joint venture with Rajesh Exports

Meet on marketing methods

Book in advance and fly for less

No hurdles seen in way of Bharti, Wal-Mart retail plan

`Indian retail industry likely to emerge the largest'

`Consumers, suppliers should gain from retail sector policy'

National workshop on retail

Sleepins Apparels plans to launch Bia

Epson unveils multimedia projectors