Walmart Puts India Expansion on Hold Due to Government Regulations

In a surprise move, Walmart (NYSE: WMT) put its ambitious expansion plans in India on hold after ending its partnership with Bharti Enterprises.

Bharti, which had a joint venture with Walmart, operating 20 wholesale "cash-and-carry" stores that sell to other businesses like retailers and restaurants, fell into problems with India's government last year. Bharti faced two government investigations and conducted an internal investigation on possible violations of U.S. anti-corruption laws in India.

In addition, the Indian government is investigating whether Walmart violated foreign investment rules by giving Bharti Retail an interest-free loan of $100 million that could later be converted into a controlling stake in the company. Both companies deny wrongdoing.

However, Scott Price, Walmart's chief executive for Asia, told The New York Times that the problem is the Indian government's regulations requiring foreign retailers to buy 30 percent of products from local small and midsize businesses. Indian retailers do not face the same requirement.

"I don't understand how this 30 percent small and medium enterprises can be executed," Price said.

Walmart plans to buy Bharti's 50 percent stake in the joint venture, and the two companies will operate independent businesses in India

For more, see:
This The New York Times article.

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