A visit to India by Wal-Mart executives has sparked protests by small shopkeepers worried about its plans for a tie-up with Bharti Enterprises.
Small retailers fear that they will lose business
Communist protesters were briefly arrested after they marched on government buildings in Delhi, waving placards saying "Save small retailers".
Wal-Mart vice-chairman Michael Duke is in Mumbai for talks with Bharti bosses and government representatives.
Wal-Mart and Bharti are planning a joint venture for cash-and-carry.
A statement from Wal-Mart says Mr Duke is visiting India "to learn more about the market first-hand and to further explore the wholesale cash-and-carry business".
The protestors burned an effigy representing Wal-Mart near the office of Kamal Nath, the Indian commerce and trade minister.
India's retail industry is worth about $300bn (£150bn) a year and has attracted the interest of international retailers such as Metro, Carrefour and Tesco.
A spokesman for India FDI Watch, which tries to limit the growth of foreign retailers in India, says Wal-Mart's entry threatens large numbers of jobs.
"Around 40 million people depend on the retail sector and these people's livelihoods will be ruined if Wal-Mart is permitted to enter India's retail market," he said.
Indian law currently allows foreign multi-brand retailers to run only cash-and-carry or franchise businesses.