Reports on all-clear for Walmart India are premature

by The City Wire staff ( 4 views 

Several news organization, including the Wall Street Journal recently reported that Wal-Mart received a clean record from the foreign investment investigation, sourced from officials close to the issue.

But it may be too premature to claim an “all-clear” given the probe was sent to the India’s central bank for review last year, and that enforcement directorate has not yet released its findings.

Wal-Mart confirmed they are still are waiting to hear from India’s enforcement directorate.

“We respect the process and have cooperated with the government throughout the ED’s review and investigation. To our knowledge, the ED has not yet officially released its findings, so we have not seen the result of its review and cannot comment,” Wal-Mart spokesman Kevin Gardner said.

Wal-Mart made a $100 million investment in India back in 2007 when it partnered with Bharti in a joint venture it hoped would give it a foothold into India’s $400 billion market. At the time, India had strict rules pertaining to foreign investment and did not allow them have a majority stake.

In recent days, Wal-Mart announced it would split with Bharti and go its own way for now. Last year India relaxed the ownership rules to allow foreign-owned supermarkets into the country.

But Walmart International CEO Doug McMillon said the rules are still changing pertaining foreign investment, which is why they will stand pat for now with 20 wholesale stores run under the Best Price banner.

He said the changing rules made it difficult for Bharti and Wal-Mart to partner, given that individual states must decide on retail expansion. Bharti handled the retail outlets and Wal-Mart ran the wholesale cash and carry business, and also supported Bharti with product inventory and supply chain infrastructure.

McMillon said the new rules did not work for either party which is why they chose to split up the company.

He said Wal-Mart will continue to invest in its wholesale business in China while working to build out supply chain infrastructure in hopes of one day applying for a retail license of its own.