Walmart aims for first India retail store in 12-18 months

US giant Walmart said on Friday it aims to launch its first retail store in India within the next 18 months after the government opened the vast consumer market to foreign chains.

"That is the plan -- to open (stores) in 12 to 18 months," a spokesman for the world's largest retailer by sales told AFP, declining to disclose details including how many branches Walmart might open.

Up until now foreign groups such as Walmart could only operate as wholesalers amid fears that big Western retail chains would swamp India's tens of millions of small family-run stores which dominate the sector.

The government signed into law Thursday a decision to allow foreign multibrand retailers to set up shop in India via joint ventures, as part of a burst of reforms to further open up the economy and kickstart sharply slowing growth.

Walmart, which already operates stores in neighbouring China, is the first foreign company to formally announce its intentions to enter the retail market under the new policy which kicked up a political storm, with the Congress-led government's largest coalition partner pulling out in protest on Friday.

Protests against the reforms were staged across India on Thursday.

To prepare for its store entry, Walmart opened its first wholesale supply outlet in 2009 in alliance with Bharti Enterprises, parent of India's top mobile firm Bharti Airtel, and now has 17 "Best Price" cash-and-carry outfits.

"Walmart has a reasonable amount of experience about the Indian customer and society and that's why I think they can get off the ground reasonably quickly," Arvind Singhal, chairman of Indian consultancy Technopak, told AFP.

Walmart and French supermarket Carrefour, the world's second-largest retailer, and others such as Britain's Tesco had been pressing the country of 1.2 billion people to open up the retail sector to offset tepid Western markets.

India's retail market clocks $500 billion in sales annually, a figure expected to grow to $800 billion in the next five years, Technopak says. Of that, chain stores account for $33 billion, a sum seen growing to $80 billion within five years.

Technopak's Singhal dismissed fears family-owned neighbourhood stores would be pushed out of business by enlarging the foreign retail presence.

"The pie's big enough for everyone. If you look at the projected figure for chain store sales in five years, it represents only 10 percent of total sales," he said.

The government has also imposed curbs, saying foreign multibrand stores can only open in states welcoming them and in cities with over one million people, he noted. Just a third of India's 29 states have said they back retail reforms.

Modernisation of India's retail market would take years, Singhal added. "This transformation will not be overnight."

Tesco, which helps steel-to-tea giant Tata Group operate the Indian company's Star Bazaar chain of 13 stores, said in a statement the company "welcomes this positive development, but we await further detail".

And Carrefour, reported by Indian media in July to have put on hold an expansion plan for wholesale stores in India in the face of a European slowdown, declined to comment. It has two cash-and-carry stores in India.

Earlier this year India allowed foreign companies to own 100 percent of "single-brand" retail ventures, up from an earlier cap of 51 percent.

The move prompted Sweden's IKEA to apply to open outlets in India as it seeks new markets for its flat-pack furniture, although it is still awaiting the government's nod.

pmc/co/ami

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