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Walmart Staying or leaving?
Posted On: 12-09-2013 00:00:00 13

As per a report in Economic Times, Walmart will take a call by the month-end on whether it will continue to do business in India or exit the country. The Walmart leadership in the US is reportedly divided over the company's future plans in India with one section led by chief executive Mike Duke being bullish about the country's future prospects and another group, that believes doing business in India is difficult with issues ranging from tough entry conditions for foreign multi-brand retailers, to a corrupt administrative system that makes it difficult for American corporations to do business without flouting US anti-bribery laws. Also, since Bharti Walmart, the 50:50 cash and carry joint venture between the US retailer and Bharti Enterprises, generates annual revenues of $500 million, the group that advocates a complete exit from India believes this is small change for Walmart, which grossed annual revenues of $466 billion last year.

It is reported that Walmart will decide in the next few weeks whether it wants to enter front-end retail or remain confined to the cash and carry business or exit the cash and carry business as well. It will also decide whether it wants to retain Bharti as its partner, if it wants to continue in India.

The company has to decide whether it can secure the multiple licenses required to open retail outlets in India without violating the US Foreign Corrupt Practices Act (FCPA) that bars American corporations from bribing government officials overseas. The ongoing investigations by the US federal authorities against Walmart's Mexico unit where company executives have been accused of bribing government officials is also weighing on the retail giant as it takes its decision about India.

Walmart's final decision about its future plans in India will have a crucial bearing on Bharti's future prospects in the retail sector. The company operates 200 retail stores and has been banking upon Walmart's funding and expertise to grow the business.


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