India backs away from Wal-Mart

The government has suspended a plan to allow foreign companies to own as much as 51% of local supermarkets.

By Kim Peterson Dec 7, 2011 3:02PM
Image: India (© Donald Edwards/age fotostock)When you have a former state official threatening to burn Wal-Mart (WMT) to the ground, you have a problem.

That's the kind of controversy India found itself in last month after giving Wal-Mart and other foreign companies the green light to own up to a 51% stake in supermarkets. Smaller shopkeepers worried that Wal-Mart, with its rock-bottom prices and competitive prowess, would put them out of business.

"If Wal-Mart tries to open its mall anywhere, I will burn it myself," said Uma Bharti, a former state chief minister who opposes the plan, according to Reuters.

The issue turned into a crisis, leading India to suspend the decision this month. The reversal is a blow to Prime Minister Manmohan Singh's work to bring in more foreign investment, Bloomberg reports. Singh said the move would create millions of jobs and curb inflation, but many weren't buying it.

Local merchants closed their shops on Dec. 1 in a one-day strike against allowing global retailers.

Wal-Mart wasn't saying much publicly about the decision. Neither was France's Carrefour (CRRFY), which was mentioned as another global retailer that could benefit.

Others said the move shows that it's becoming harder for outside companies to enter into India, one of the most promising emerging consumer markets in the world. Starbucks (SBUX), Dunkin Brands (DNKN) and other companies are forming alliances in order to open outlets in the populous country.

"It was easier to operate in the country a year ago than it is today," the CEO of General Electric's (GE) Indian unit told Bloomberg. "It is frustrating to look at unresolved issues and know that they’re resolvable if you can get some leadership and orientation around them."

Wal-Mart already has a toehold in India. The government already allows foreign companies to own wholesale stores, and Wal-Mart has set up 14 of those in a joint venture with an Indian firm.


47Comments
Dec 7, 2011 3:45PM
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They are smart not to allow Walmart into India.  Look across the United States and you can count thousands of small businesses that Walmart has put out of business in small and large towns.  Drug stores, hardware stores, grocery stores, everything.  Capitalism has let business get too big.   Another bad thing that Walmart does is probably 80%R of what they sell comes from China and is pure junk.  Most likely infested with pesticides and made of materials that are dangerous to our health. 
Dec 7, 2011 5:58PM
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Apparently the gov't of India is a heck of alot smarter then we are in the U.S. They have seen the wasteland towns Wal-China has created and don't want that to happen to them Good Move!
Dec 7, 2011 4:48PM
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Why are people stupid?  Or racist?  Or just so ignorant that they assume because something kind of American gets the short end of the stick, that America is being slighted somehow?

WalMart is not America, folks. 

India is not hurting America, just keeping Walmart from hurting India the way it is hurting America.



Dec 7, 2011 4:33PM
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What's good for the goose is good for the gander..... take back all the high tech outsourcing all the computer companies use in India - I'd be happy to speak with somebody who actually understands English
Dec 7, 2011 7:03PM
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If only local governments in this country had as much wisdom maybe their small cities and towns would still have a economy.

Dec 7, 2011 4:50PM
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Being an Indian and living in the USA for the last 10 yrs, i would say this was a smart act. Allowing walmart and other multi giant retailers would kill thousands of small business. We already seen so many small business wiped away by walmart here and i dont want this to happen in India.


Dec 7, 2011 5:01PM
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Issue-1: The statements like 'Indian gem cutters took the job away' or 'Indian SW programmers took the jobs away' or for that matter 'chinese took manufacturing jobs away' are all not 100% correct. Its the American govt policy and the American companies that sent the jobs away from US. India or China did not pitch for it. There is something wrong with our policy. And expecting China and India to do the same, is not correct. Bcos, they clearly see that Walmart has shut millions of mom-n-pop shops thru unfair game play (Chinese goods or India Programmer are cheap bcos their companies do not pay for employee health insurances, license are cheap, do not spend money for safe items (read 'lead in paint' etc).
So...lets stop whining over other countries and lets start set things right here. Let us stop buying items from other countries and also, stop selling them the fighter planes, guns, and bombs.

Dec 7, 2011 4:06PM
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Good for India. Walmart is not that cheaper than other stores if you shop around.
Dec 7, 2011 4:21PM
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I can remember when "Chinese junk" refered to a type of boat.
Dec 7, 2011 9:16PM
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Way to go India. U.S pay attention and learn a lesson. Bring manufacturing back to US . Americans,  buy made in America and soon Wal-Mart will be history. No one needs that much crap.

Dec 8, 2011 8:29AM
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I think the Indians are smart to prevent Wart*Mall from coming in.  That company has done nothing but destroy main streets all across the USA.  It is a blight and an eyesore.  My small town had every single store on main street shutdown because of Wart*Mall.  Don't make the same mistake we did.  Our town looks like hell now.  It used to be beautiful, almost like an old Hollywood movie.  The people who used to own the stores were neighbors.  Now, all the profits got to outsiders who don't care.

 

 

Dec 7, 2011 6:03PM
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Revolt!  Jan 1, no one call any technical support numbers.

 

(sarcasm, in case you missed it)

Dec 7, 2011 9:58PM
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Good for India. They are watching out for themselves....maybe we could learn from them eh?
They don't want Chinamart shitting up their area. I wouldn't either.

Dec 7, 2011 10:25PM
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Wow, India is smarter than we are. Wow
Dec 7, 2011 5:34PM
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Lets assume India said YES for Walmart. In that case Walmart would buy from China, sell to India and share the profit with share holders. Why are we pitching here for Walmart!!
Due to China govt Currency practices, there might be a situation that US Govt would ban or apply taxes to imports from China. In that case, it is better for us...'us' the consumer and US Citizens, if Walmart has no other import points. At least that way, US may have some manufacturing jobs. If India allows Walmart to Sell, then Walmart would gradually develop another cheap manufacturing import point for itself...'for itself'..not for 'us'.
Dec 7, 2011 4:50PM
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Ha Ha!! Take back all the outsourcing?  You don't understand anything do you?  You think we are outsourcing to India as a favor to them? 



Dec 8, 2011 5:29AM
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Yes I have  had to call G.E. call center  in India before and I could understand them fine!   OH hell that is not why I'm on here!!!!!!

 

 Why would you want Walmart in your country?  All they sell is cheep made china junk here in the U.S. !  !

 

All they would do is shut the doors on all the mom and pop's  stores in your country  ! Come look at  Any small town in the U.S. and are mom and pop's are long , long gone !  Oh yes they bring  Lots of jobs, but  not good jobs!

Dec 8, 2011 12:46AM
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Good for India!  Wal-mart would destroy the local small businesses just like it did here.

Dec 7, 2011 9:26PM
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ha ha India is smarter than the US.
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