American multinational retail giant Walmart has revived talks with India's largest conglomerate Tata group for a strategic partnership in India. The Bentonville-based company is looking to enhance its engagement with Indian consumers in the wholesale cash-and-carry business.
The development comes days after Reliance Industries chairman Mukesh Ambani announced that the company would be scouting for a global partner for its retail business in India.
Meanwhile, Walmart's association with Tata is aimed at the US behemoth leveraging Tata's existing distribution network to expand its outreach to Kirana stores. Walmart also plans to enhance Flipkart's presence in the food and grocery segment. It owns a 77 percent stake in the ecommerce company.
One of the executives privy to talks said: "This partnership will aim to expand reach to kiranas, upgrade them and then utilize the network for fulfillment of food and grocery orders for Flipkart. It's almost the same as what Reliance Industries intends to do and at a similar scale. This is an asset-light model and Walmart will thereby have an indirect presence in retail in a peaceful way without making any capital investment."
He further added that Walmart is vouching for an Indian partner who is "respected" and "has a voice in policymaking". Tata Group and Tata Sons are being represented by its CFO Saurabh Agrawal in the negotiations. In recent times, senior group executives have visited the US to deliberate on the issue. But the discussions are yet to reach the final stage and expected to take months.
The Times of India reported that if Walmart wants to scale up its local business in India and leverage on its whopping $16 billion investment in Flipkart, it will need a local partner with a strong offline presence.
Walmart is putting its bet on Tata group for such expertise. Tata has a considerable presence in Indian hyper and supermarkets ecosystem. Tata group operates under the banner of Star Hyper, Star Market, Star Daily and Star Extra and has 43 stores across Mumbai, Pune, Kolhapur, Bengaluru and Hyderabad.
As per present regulations, 100 percent foreign direct investment (FDI) is allowed in single-brand retail, food retail and e-commerce marketplaces in India. On the other hand, in multi-brand retail, 51 percent FDI is allowed.