Wal-Mart rethinks its strategy in India amid relaxed government rules

Wal-Mart Stores is once again tiptoeing toward expansion plans in India, after pausing the past couple of years since the breakup of its partnership with Bharti.

IGD Retail recently noted Walmart India has confirmed plans to grow its cash and carry stores from 21 to 50 in the next three to five years, focusing on the cities in the north.

Walmart India said half of its 50 stores will be located in Uttar, Pradesh and Uttarakhand. IGD said the northern area is an opportunity for Walmart India because its chief wholesale competitors Reliance and Metro AG have not yet penetrated the markets.

Walmart India’s cash and carry business is wholesale in nature and the retailer in 2016 told Talk Business & Politics that business model would be the plan going forward. Early last year Walmart India announced 15 new cash and carry stores to be located in the country’s southern region.

“Our commitment to the country is very deep and we are growing our footprints in India further by opening 50 more cash-and-carry stores in next few years across key focus states … Our development team is growing this store pipeline for last couple of years and we’re confident of continuing our contribution to the creation of thousands of skilled jobs, helpings kiranas, farmers & suppliers succeed through our cash & carry business,” a Walmart India spokesperson noted in an email.

India has been somewhat of a troublesome market for Wal-Mart Stores despite being one of the fastest growing nations in the world and ripe with consumer demand. The retail giant invested into a partnership with Bharti in 2007 to begin establishing its wholesale cash and carry business and working to build supply chain capabilities. That partnership ended in 2015 and Walmart India has been cautious with expansion amid an ongoing investigation by the U.S. government for potential corruption allegations.

Interest is growing agains as the Indian government begins to relax rules for food retailers by allowing 100% foreign direct investment in food products manufactured locally.

“Walmart is interested in this business, but is hoping that a certain percentage of non-food items will also be included to make it economically viable. It is awaiting clarity on the food retail guidelines before committing,” noted IGD analysts. “There will be plenty of competitors in this segment if it chooses to enter this arena. Online players Flipkart, Amazon and Grofers have already sought government approval to operate in this category.”

Walmart India released the following statement regarding the new rules for food retailers: “As we’ve said earlier, allowing 100% FDI in food retail is a very progressive step, but having a certain percentage of non-food items in this policy will make it economically viable.”

Krish Iyer, Walmart India CEO, recently told the media recently the retailer is comfortable selling only “Made in India” products. He said even in Walmart’s Indian cash and carry business, imported items make up just 5% of the inventory.