Analysis

India: Wal-Mart Shut Out of Marketplace
Shopkeepers wait for customers in New Delhi on December 7, 2011. India suspended plans to open its $470 billion retail sector to foreign supermarkets like Wal-Mart after an outcry from small shopkeepers and members of the opposition party. The reform would have allowed foreign firms to hold a majority stake in large chains, competing with traditional family-run shops. (SAJJAD HUSSAIN/AFP/Getty Images)
January 24, 2012
| Economics
| Asia and the Pacific
Summary
India’s recent announcement that it would permit “single-brand” retailers like Starbucks (SBUX) to operate freely in its domestic market does little for “multi-brand” players like Wal-Mart (WMT), which remains on the outside looking in.
In late 2011 India’s government floated the idea of letting Wal-Mart control 51 percent of the ownership stake in the stores it might build in the future, but a massive political backlash from powerful interest groups abruptly stopped that plan. As of today, Wal-Mart’s future in India looks bleak. That could change, however, if India’s economic challenges (slowing GDP growth, high inflation, etc.) reach a tipping point and enable real reform to gain traction.
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