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Walmart may eat away Indian retailer's bread-and-butter

Aug 08, 2007 10:59 PM IST Business Business

New Delhi: A fifty whooping billion dollars—that's the wholesale pie of Indian retail market that the American giant Walmart wants to bite into.

World’s biggest grocery store brand Walmart has probably sensed the insecurity of the small-time Indian retailers who are threatened by the entry of international brands in the market.

While the Indian government's decision to partially open the retail sector to foreign players has been criticised by small traders, Walmart has tied up with India's Bharti Enterprises to set up a retail base in the country.

As part of the agreement, the US-based retailer would handle back-end operations of the joint venture company. With Bharti as its partner, Walmart has some ambitious plans to take over India’s retail market, which is worth a whopping 50 billion dollars. India is not Walmart’s first cash-and-carry experiment. It operates on a similar model in Mexico.

To make the most of the wholesale opportunity, Walmart will invest several millions of dollars into setting up supply chain infrastructure in India. The company is in talks with local logistics providers and suppliers in India to source for its B-to-B wholesale cash and carry joint venture with Bharti

“We are looking at local warehouses, trucking companies, refrigeration manufacturers. We will certainly have our own warehouses and distribution centers across India,” said Raj Jain Country President, Walmart India.

The Bharti-Walmart alliance is also talking to global suppliers in china, US and Latin America to join them in India. Walmart is currently sourcing products worth 600 million dollars from India and the figures are expected to multiply once the cash-and-carry stores start rolling out by the end of 2008.

“Currently our sourcing out of India is about 600 million dollars. But this is much lower than what the potential of India is. I cans see that number, increase in multiples, once we understand the supply chain in India,” said Raj Jain Country President, WalMart.

The JV company is in talks with several real estate developers and will finalize locations, property investments and a range of merchandize within the next 3-months. The Walmart India team currently has 60 people and the company will employ 5,000 more in the next 5 years.