India's government considers allowing foreign retailers, such as Wal-Mart Stores and Carrefour, to own up to 51% of stores selling more than one brand or permit full ownership in exchange for minimum US$100M investment in infrastructure
November 17, 2011
– India’s government is considering allowing foreign companies to own up to 51% of stores selling more than one brand or permit full ownership, Bloomberg reported Nov. 17.
Under current regulations, foreign companies may not own retail outlets selling more than one brand and 51% ownership is available only at stores selling a single brand.
Wal-Mart Stores Inc. and Carrefour SA are among foreign investors eager for expansion in India, where the retail market is valued at US$396 billion and is expected to reach $785 billion by 2015.
A deal, which could come early next week, may be contingent on stipulations, such as requirements that companies acquire 30% of goods locally. Furthermore, investments starting at $100 million for supply chain development will be required. India’s poor transport infrastructure coupled with a lack of temperature-controlled storage facilities account for the waste of around 40% of the country’s produce. Diminished regulations are seen as a way to bring down food prices, the publication stated.
Wal-Mart, through a joint venture with Bharti Enterprises Pvt., currently has 14 wholesale businesses in the country. Carrefour will enter India this December, and UK-based Tesco is awaiting the green light for foreign ownership before initiating operations there.
The primary source of this article is Bloomberg, New York, New York, on Nov. 17, 2011.