Wal-Mart , the world's top retailer, will be ready to open hundreds of stores in India if the country opens up the sector to foreign direct investment, the chief of its Indian joint venture said.
India's $450 billion retail sector is largely closed to foreign firms and favors small mom-and-pop stores, which provide livelihoods for hundreds of thousands and serve a market of more than 1 billion.
If the laws of the country change to opening of FDI in retailing, we could open hundreds of stores, Bharti Wal-Mart Managing Director and Chief Executive Raj Jain said on Thursday.
It is essential that FDI in retail opens up, because then we can open our own stores and carry the product in hygienic, safe conditions not only at the farm-gate but also right up to where the consumer buys from us, he said.
Earlier this month, the government took a tentative step toward opening up of the organized retail sector to foreign companies by putting out a discussion paper but steered clear of suggesting changes to the investment cap.
Currently there is a cap of 51 percent foreign direct investment in single-brand retail outlets, while retailers that carry multiple brands are restricted to cash-and-carry or wholesale outlets like the ones Wal-Mart operates in India.
The discussion paper is seen as testing the appetite in Asia's third-largest economy for a politically sensitive reform and officials expect something to happen this time, after a move to open the sector was stalled during Prime Minister Manmohan Singh's first five-year term.
Analysts say opening up retail to foreign direct investment may help bridge a high fiscal deficit, rein in food price inflation by curbing waste and create thousands of jobs.
DEBATE ON IMPACT
Last time the proposals to open up multi-brand retail stalled amid vocal protests from the government's former leftist allies and fears over the future of small family-run outlets.
Even big local retailers face opposition in some states amid claims they cause massive job losses.
But Bharti Wal-Mart's Jain said there was no reason to fear a major impact on small retailers.
Let's go by statistics what other countries have done. When China opened it 20 years ago, that has not happened. Mexico opened 20 years ago, that has not happened. Brazil opened 20 years ago, that has not happened, he said.
There are research reports of the government itself which prove that. So, while I understand the debate and the fears, the truth is all the data which points in the direction that there is nothing to fear about.
Bharti Wal-Mart operates wholesale stores in India under the Best Price Modern Wholesale brand, and has so far opened two stores. The joint venture expects to open 10-15 such store over the next three years.
Separately, the number of retail stores operated by Bharti Retail would go up to 140 by the end of 2010, from the current 80, Jain said.
When asked whether Wal-Mart would continue with the joint venture partner Bharti if the government relaxed foreign investment in retail, Jain said they would decide depending on what and how the laws would be.
We are very happy with our joint venture with Bharti, he added.
UK's Tesco has a joint venture with Tata's Trent while Germany's Metro AG has a solo operation of wholesale stores in the country and France's Carrefour has also been looking at opening wholesale stores.
(Writing by Janaki Krishnan; Editing by Ranjit Gangadharan and Lincoln Feast)