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Last Updated: Monday, 27 November 2006, 15:27 GMT
Wal-Mart to enter Indian market
Sunil Mittal
It is going to be a large investment, we are going to be a big player in this market
Bharti boss Sunil Mittal

US supermarket giant Wal-Mart is to enter the Indian retail market after announcing a joint agreement with India's Bharti Enterprises.

The two companies said they had signed a deal to "jointly explore business opportunities" in India.

Bharti chairman Sunil Mittal said the two companies intended to open "several hundred" stores across India under the Wal-Mart brand name.

Wal-Mart's deal comes after Britain's Tesco ended talks with Bharti.

Tesco had hoped to reach a similar deal with Bharti, but its negotiations ended without agreement last week.

Bharti had also spoken with France's Carrefour and Germany's Metro, according to reports.

Fast-growing market

The Bharti joint venture is a huge opportunity for Wal-Mart to gain a foothold in a market analysts expect will double in value to $637bn (330bn) by 2015.

"Wal-Mart was keen to get into India. I think they have chosen the right partner," said Mr Mittal.

Analysts expect the big players to account for a large share of growth in retailing that is bound to come with India's rising middle class
Andrew Walker, BBC economics correspondent

"It is going to be a large investment, we are going to be a big player in this market."

Large overseas retailers such as Tesco and Wal-Mart are currently barred at the retail level in India, but not in the wholesale market.

Mr Mittal said the deal with Wal-Mart complied with existing government rules, suggesting Wal-Mart will handle the supply side of the operation, while Bharti will run the stores.

Closed reaction

Bharti is a well-known brand in India, offering mobile phone services to more than 24 million users.

The company is keen to expand its business reach and tap further into India's rapid economic expansion, growing middle class and rising consumer demand, analysts said.

Busy New Delhi road
India's economy is growing rapidly

Bharti's agreement with Wal-Mart is likely to run into opposition from India's small shopkeepers, who currently account for the majority of retail sales, said BBC World Service economics correspondent Andrew Walker.

"They are often family businesses and they are worried that lowering the barriers to Wal-Mart and others might cost them dearly," he said.

"Certainly analysts expect the big players to account for a large share of growth in retailing that is bound to come with India's rising middle class."




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