MUMBAI — Walmart Stores Inc. gave up on India’s huge market on Wednesday, saying it had indefinitely delayed its once-ambitious plans to open hundreds of superstores across the country.
The announcement adds to the gloom enrobing the Indian economy. Growth has slowed sharply, and the value of the rupee has fallen starkly in recent months. It also suggests that the government’s efforts to lure more foreign investment are failing, but the governing United Progressive Alliance’s plan has never been popular with India’s politically vocal retailers.
Walmart, the Bentonville, Ark., company that is the world’s largest retailer, also said it was ending its joint effort with Bharti Enterprises of India to operate 20 wholesale “cash-and-carry” stores that sell to other businesses like retailers, hotels, and restaurants. Walmart plans to buy Bharti’s 50 percent stake in the venture, and the two companies will operate independent businesses in India.
That Walmart kept the wholesale business, seen as a way to learn about India’s fragmented retailing sector, suggests the company has not entirely ended its hopes of eventually selling at a retail level.
Walmart’s chief executive for Asia, Scott Price, said this week that the Indian government’s regulations requiring foreign retailers to buy 30 percent of products from local small and mid-size businesses were the “critical stumbling block” to opening consumer stores.
“I don’t understand how this 30 percent small and medium enterprise can be executed,” Price said Monday at the Asia-Pacific Economic Cooperation forum in Bali, Indonesia, the Associated Press reported.
He said that Indian retailers were not required to follow the same rule, which made it too difficult for outsiders to make money, because no enterprise small enough to meet the government’s requirements had the capability to produce on the scale that a giant retailer requires.
“For Walmart, there has been frustration brewing for a long time about the obstacles to doing business in India and the changing configurations of what it could do and what it couldn’t do,” said Devangshu Dutta, chief executive of Third Eyesight, a Bangalore retail consulting firm. “To just continue to pump in money without reflecting on this would be pointless.”
Girish Kuber, a former political editor of The Economic Times, called the dissolution of the Walmart-Bharti partnership inevitable.
“It is a sad story,” he said. “The reforms are going nowhere, and there is no investment coming in.”