Walmart Stores Inc would consider opening physical outlets and selling products online if New Delhi allowed overseas supermarkets that directly sold Made-in-India products to consumers. Walmart currently operates 21 of its Best Price branded wholesale chain in the country. The retailing giant had bought the 50% share from Bharti Enterprises in the cash-and-carry joint venture after the alliance ended in October 2013.
Krish Iyer, chief executive of Walmart India, told ET, “We are okay with selling only ‘Make in India’ products because even in our cash-and-carry stores, imported items make up for only 5% of our total products.”
Iyer said that with more than 95% local sourcing, Walmart India is already a partner in the government’s Make-in-India initiative, which seeks to establish the South Asian nation as a manufacturing hub. Imports don’t make sense for supermarkets such as the Bentonville, Arkansas-based giant, as high customs duties raise prices, negating the sourcing efficiency that makes Walmart among the cheapest global retailers.
It has become imperative for Walmart to move forward with its strategy on selling directly to Indian consumers after Amazon.com in February applied to the government to invest $515 million into a venture that would sell foods online and through physical stores, becoming the first global retail titan to take advantage of the policy.
Last year, India allowed 100% subsidiaries of global companies to sell food products through brick-and-mortar stores and the Web as long as the products were locally produced. The BJP government, that has otherwise opposed foreign supermarkets into India, said the policy change was aimed at creating jobs, helping farmers, and reducing India’s notorious food wastage that is blamed on the country’s antiquated supply chain. After the policy was unveiled, New Delhi had hoped that global chains such as Walmart or Tesco would welcome the foodonly retailing: However, overseas retailers were lukewarm to the proposal, suggesting that only low-margin food items do not make such businesses viable.