Friday,Jul 28,2006
Wal-Mart gets nod for offices http://www.business-standard.com/common/storypage_c.php?leftnm=10&bKeyFlag=BO&autono=99694&chkFlg=
Bipin Chandran / New Delhi July 28, 2006
Even before India could open the doors for FDI in retail, Wal-Mart has made a quite entry into India. The government has allowed Wal-Mart to set up two offices in India.
The Indian offices, which are likely to be based in Delhi and Mumbai, will explore business opportunities for Wal-Mart in the Indian retail sector.
The offices will also undertake a market study regarding Wal-Mart's strategy in India. It will also identity potential Indian partners for its retail foray as well as other investment opportunities here.
One of the other responsibilities of the Indian offices will be to increase the company's sourcing activities in India. It is projected that Wal-Mart wants to source materials worth $4 billion from India in the near future.
Wal-Mart, which currently has sourcing arrangements with garment manufacturers and other suppliers in India, is keen to expand its network of sourcing partners in India.
All regulatory approvals, including one from the Reserve Bank, have been obtained by the company. The setting up of these offices, however, does not entail any inflow of FDI and is not meant to enter the Indian retail market.
Neither can these offices undertake any business in India.
This move by the world's largest company comes at a time, when the government is debating allowing foreign direct investment in retail sector.
Intense lobbying is also been undertaken by Indian companies entering the retail sector also to block the entry of foreign companies like Wal-Mart into India.
The Indian operations, which will be handled by the Hong Kong or Singapore offices of Wal-Mart will be operational by October-November 2006.
The model adopted by Wal-Mart is typical of companies operating in sectors with strict foreign investment conditions.
Such companies come into India by opening branch offices, which will be converted into subsidiaries as and when government relaxes FDI regulations. These offices, will be representing the company's business interest in India.
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