Wal-Mart & Bharti for Retail Run

Wal-Mart will set up its first shop in India on August 15, 2007, through a franchisee agreement with Sunil Mittal’s Bharti Enterprises.

The long wait for Wal-Mart seems to be over with the partnership of Bharti to enter into Indian retail market. In India, FDI in retail is restricted to single brand store. For multi brand retail the FDI is allowed in franchise route. In order to enter into the Indian retail market Wal-Mart had no other option but to enter through franchise. For that they have got the right partner. When Sunil Mittal’s Bharti has good knowledge about the India’s fast growing consumer market, Wal- Mart the world’s biggest retailer has extensive global retail experience.

Sunil Mittal will own the front end retail store as FDI is not allowed in these stores (For multi brand retail). But the FDI is allowed up to 100 percent in areas such as cash and carry, logistics, supply chain and sourcing. Both the companies will invest jointly in the back-end areas in which they have agreed for the joint venture.

It is going to be win-win situation for consumers. Already India’s second richest man Mr. Mukesh Ambani has entered in to this business and started opening its stores. The Birla group has also grandiose plan to invest Rs. 15,000 crore in retail sector. Now the Bharti and Wal-Mart joint venture is the third biggest retail on line. Presently Future Group (Earlier Pantaloon), India’s biggest retailer is also expanding itself to survive in its own market with the entry of the giant groups. All this is going to benefit the consumer.

This is the second business in which Sunil Mittal and Mukesh Ambani are competing with each other. Earlier it was mobile service in which Sunil Mittal was able to face the tough competition against the Reliance because of its first mover advantage to that business. Now Reliance has the same position. The future will say who is going to win this battle.