Walmart was in talks with Indian partner Bharti Enterprises on its future business plan and aimed to reach an agreement in the next few weeks, the world’s largest retailer said.
Walmart had a “very good” relationship with Bharti and had had multiple talks with billionaire owner Sunil Mittal in the past few days to determine the next steps, Scott Price, the head of Walmart’s Asia operations, said on Saturday.
His comments came after media reports in India suggested that Bharti was seeking to exit the joint venture due to Walmart’s lack of progress in expanding Indian operations.
“We are having very productive discussions with Bharti,” Price said. “I would hope probably in the next several weeks we will reach an agreement with them. But no matter what happens, there is no pressure in the relationship.”
He declined to comment on speculation that the company may break up the partnership.
While the nation changed laws in September last year to allow foreign retailers to own majority stakes in multibrand retail chains, no global retailers have sought such licences yet. The government also loosened rules covering sourcing, infrastructure investment and store location in August, in an effort to woo global chains.
Under the new rules, foreign-owned retailers will have to buy 30 percent of manufactured goods from small- and medium-sized local firms with less than $2 million (R20m) invested in plants and machinery.
Price said the entry barriers for foreign retailers “aren’t workable”.
“Until the sourcing issue is resolved, I believe no foreign company will apply and can comply,” Price said. “We are not interested in investing until that’s clear.”
Any plans might be delayed at least until India’s general election expected by May next year as a result of uncertainty over the next government’s policies on foreign investment in retail, ICICI Direct analyst Dhvani Bavishi said.
Mittal told the Press Trust of India last week that he was waiting for Walmart to take a decision on Indian retail before Bharti evaluated its options.
Bharti declined to respond to Price’s comments.
The Bharti and Walmart joint venture operates wholesale cash-and-carry stores that allow entry only to registered members who would include restaurants and local retailers. Foreign investment in such stores is subject to fewer government restrictions in India than retail outlets.
The venture opened its first wholesale store in the northern city of Amritsar in May 2009, and now operates 20 such outlets in the country. New store openings have slowed, with the company’s most recent being almost a year ago, according to its website.
The Economic Times reported on September 12 that Walmart was considering whether to continue its business or exit its operations in India.
“Like in many instances, speculation has got nothing to do with reality,” Price said. Adi Narayan and Stephanie Wong Mumbai