Red tape, graft mean India not such a super market for Wal-Mart

Wal-Mart’s India expansion is stalled.

When India announced last September that it would allow foreign supermarket chains to take majority ownership of their Indian operations, it marked a victory for Wal-Mart Stores, which had spearheaded efforts to open the market and said its first retail store would open within two years.

Now, two sources within the retail giant’s Indian unit say it is unlikely to apply for its first retail store licence before March 2015. The company has said it needs a further 12 to 18 months after winning government approval to open each store, which means its first retail outlet in the country would open in 2016 at the earliest.

Meanwhile, Bharti Enterprises, its local partner in an existing wholesale business, is reconsidering its commitment to their joint venture given the heavy investment requirement and distant prospects for returns, four sources with direct knowledge of the matter said.

Bharti denied that it is looking to exit the tie-up and said it remains fully committed to the joint venture, and a Wal-Mart spokeswoman declined to comment on what she called speculation.

The latest developments stem from an ongoing internal bribery probe relating to its Indian operations, still-evolving rules governing foreign participation in India’s retail sector, and national elections due by May next year that could result in the controversial retail reform being reversed - and any newly opened supermarkets being shut - the sources said.