April 8, 2014 / 12:45 PM / 6 years ago

UPDATE 2-Wal-Mart plans 50 more India wholesale outlets, e-commerce launch

* To add 50 wholesale outlets over 4-5 years; runs 20 now

* Wal-Mart has yet to apply to open retail stores in India

* Company did not open any India wholesale stores in 2013 (Adds background on Wal-Mart’s wholesale stores)

By Nandita Bose

MUMBAI, April 8 (Reuters) - Wal-Mart Stores Inc on Tuesday announced plans to open 50 more wholesale outlets in India and start online operations to sell to small shopkeepers, several months after it decided against opening its own retail stores there.

The world’s largest retailer said it would open the stores over four to five years.

The company already has 20 Indian wholesale outlets. They sell goods to small shopkeepers, who dominate the nation’s $500 billion retail market, rather than directly to consumers. Wal-Mart has no retail stores in India.

Wal-Mart’s growth in India has been stunted by an internal bribery probe, uncertainty over regulations on foreign investment in the country, and in October, the severing of a partnership with New Delhi-based Bharti Enterprises aimed at opening retail stores.

Full foreign ownership of wholesale, or “cash-and-carry”, stores is allowed in India and has not generated any political opposition. Wal-Mart has been operating under the wholesale format in India since 2006.

Globally, Wal-Mart operates 359 wholesale stores, compared with 5,633 retail outlets, according to its most recent annual report.

In 2013, Wal-Mart did not open a single wholesale outlet in India despite plans to open eight during the year.

“We are evaluating and reinforcing procedures and programs relating to all compliance areas, including licensing and permits, food safety, and responsible sourcing, among others,” Scott Price, Wal-Mart’s Asia chief executive, said in a statement announcing the rollout.

A company executive in India said the first new outlets among the 50 would open soon in western and southern India, including the states of Maharashtra and Andhra Pradesh.

The executive, who requested anonymity because he was not authorized to speak to the media, said Wal-Mart would start the online business on a wholesale basis and sell goods to traders on a “very small” scale.

India does not allow foreign retailers to sell goods online directly to consumers.

Wal-Mart named a new India head in December and said then that its focus in the country would be on opening wholesale stores and building its supply chain.

The company’s desire to enter India with supermarkets has been met with fierce opposition from small shopkeepers and political parties.

Sources at Wal-Mart have said they are waiting until after national elections in May before applying to operate retail stores in India in case a new government overturns a rule allowing direct investment in supermarkets.

On Monday, the political party expected to lead India’s next government said it would bar foreign supermarkets.

Shares of Wal-Mart were up 0.8 percent at $77.93 in afternoon trading. (Additional reporting by Clare Baldwin in Hong Kong and Phil Wahba in New York; Editing by Tony Munroe, Alison Williams and Lisa Von Ahn)

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