After years of trying, Wal-Mart is getting a foothold in India, one of the world's fastest-growing economies.
The retailer on Monday announced a retail joint venture with Bharti Enterprises Ltd., a New Delhi-based conglomerate that is India's largest telecom company that also has interests in fresh produce distribution and insurance.
The deal, structured to capitalize on loopholes in India's restrictions on foreign direct investment, is said to call for Wal-Mart to provide logistics and sourcing expertise, while Bharti would franchise retail units. The alliance with Bharti means that Wal-Mart would get a head start on rivals such as Carrefour and Tesco in the potentially lucrative market.
Bharti's chairman, Sunil Mittal, said Bentonville, Ark.-based Wal-Mart and his company would open "hundreds'' of stores in the world's second most populous nation during the next five years, The New York Times reported.
"We are pleased to be in discussions with such a well-respected company that truly understands India's fast-growing retail market," said Wal-Mart International spokeswoman Amy Wyatt. She declined to comment further.
Wal-Mart has increasingly looked to its $62.7 billion international operation to provide growth as its U.S. business matures. The retailer shuttered money-losing operations in Germany and South Korea last summer as it focuses on the foreign markets that provide it with best-growth prospects. India, along with China and Japan, top that list.
"India is an exploding country with nowhere to go but up," said Howard Davidowitz, chairman of Manhattan retail consultancy and banking firm Davidowitz & Associates.
A joint venture is useful in cutting through bureaucracy and in understanding local merchandising needs and customs, areas where Wal-Mart has struggled in the past, he added.
Wal-Mart has spent several years lobbying the Indian government to lift restrictions on foreign direct investment.
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