India telecom firm in Wal-Mart deal

Bharti group to invest $2.5bn in supermarkets venture in partnership with US chain.

    Sunil Mittal, the owner of Bharti group, was Asia's Businessman of the Year in 2002 [AFP]

    Joint venture

     

    Under the deal, the US retail giant and Bharti Enterprises will set up a joint venture to manage procurement, inventories and logistics, while stores will be set up under a franchise agreement.

     

    The agreements for the joint venture and the franchise will likely be finalised when Michael Duke, the Wal-Mart Vice chairman, visits India later this week, Mittal said.

     

    Wal-Mart Stores Inc hasn't said how much it would invest in the proposed India venture.

     

    It is also not clear if the stores will be allowed to display the Wal-Mart brand.

     

    'Backdoor entry'

     

    India currently bars foreign companies from setting up multi-brand retail stores, but allows firms to operate facilities to procure goods for overseas sales.

     

    The Indian government has not raised any objection to Bharti's deal with Wal-Mart, but Ajay Dua, the government's industry secretary, has said that the final agreements would be subject to scrutiny.

     

    The deal has sparked criticism from the ruling coalition's communist allies, which described it as a "backdoor entry" for the US retail chain into India's protected retail business.

     

    The Indian retail market is estimated at about $200bn per year.

    SOURCE: Agencies


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