IndiaRetailBiz

Bharti will form another joint venture with Wal-Mart for front-end retail, as and when FDI norms for multi-brand, front-end retail in India are relaxed by the government, said Sunil Mittal, Chairman & CEO, Bharti group, while talking to media persons on sidelines of the Marketing summit, organised in Delhi by CII, on Tuesday, reports PTI.

As no FDI is allowed for multi-brand, front-end retail in India, Bharti group, it may be recalled, has formed a wholly owned subsidiary “Bharti Retail to set up a chain of front-end retail stores, in the coming months. The group has, however, signed an agreement with Wal-Mart for providing back end logistic and supply chain services for the front-end business.

Currently, while up to 51% FDI is allowed for single brand, front-end, retail, there are no restrictions on the FDI for wholesale (cash ‘n’ carry) retail trade in India.

Interestingly, despite no restrictions having been imposed on FDI in wholesale (cash ‘n’ carry) retail trade in India, the world’s largest retailer Wal-Mart has formed a 50:50 partnership with Bharti group. Multi national retailers like Metro AG of Germany and Shoprite of South Africa, are incidentally already active in this area.

Bharti is a partner of choice for the US-based retailer in India and would not go alone even if the FDI norms for multi-brand front-end retail were completely relaxed, said Mittal. As such, when FDI norms are relaxed, Bharti and Wal-Mart will either form a new joint venture, or convert Bharti Retail into a joint venture. The stake of Wal-Mart in such a joint venture would be restricted to the percentage of FDI allowed, subject to a maximum of 50%.

“Wal-Mart failed in Korea and Germany, while they are struggling in Japan and relatively doing well in China. They do recognise the need for a local partner,” he added.