Wal-Mart Stores Inc intends to set up 50 more wholesale shops in India and introduce internet-based operations to distribute to small retailers after it canceled a joint business last year and pushed back plans to own retail stores in the Asian market.
The largest retailer in the world plans to spread its expansion program in India over four to five years, Wal-Mart stated on Tuesday. The company already has 20 wholesale stores in India, which distribute to retailers as opposed to final consumers.
The business’ growth in India has been hindered by an internal investigation over corruption, unknowns around regulatory hurdles in the country and the termination of its joint venture with Bharti Enterprises of New Delhi.
According to Huffington Post, Wal-Mart announced in October that it was terminating its partnership with Bharti and could not proceed with plans to set up its own retail stores in the country because of stringent government regulations that compel sourcing of commodities from local businesses.
Under Indian regulations, foreign firms can own up to 100% of wholesale ventures. But a 2012 law change, such investors can control up to 51% of retail stores such as supermarkets. Despite Wal-Mart having being at the forefront of clamor for liberalization of India’s retail industry, it has not formally sought to open its own retail stores in the country.
In 2013, the retailer failed to set up a single wholesale store in the country despite having planned to open eight in the year.
“We are taking a number of important steps to strengthen compliance so that we do the right thing every day,” Scott Price, the company’s Asia boss said in a statement.
As Reuters reports, Price said Wal-Mart was looking into areas of compliance such as licensing and permits. The firm is also reinforcing procedures to ensure adherence to local sourcing requirements, the CEO added.
To contact the reporter of this story; Yashu Gola at Yashu@forexminute.com