NEW DELHI: The world's biggest retailer, U.S. based Wal-Mart, has tied up with Sunil Mittal's Bharti Enterprises to make a direct entry into India's retailing sector. The two companies entered into a memorandum of understanding here on Monday to explore business opportunities in retailing.

The Bharti group Chairman, Sunil Mittal, told newspersons here that, "it is a partnership of equals. Big investments are in the pipeline.'' The two companies were expected to open stores by August with the plan being for Bharti to handle the front end of the retailing business, while Wal-Mart would take care of the supply chain, the logistics and other back-end operations.

The entry of Wal-Mart into the Indian market comes close on the heels of Mukesh Ambani's Reliance Industries having launched its entry into the retailing sector.

Speculation had been rife for some time over Bharti's talks with various international retail chains, including Tesco of the U.K. and Carrefour of France as well as Wal-Mart. In fact, only recently reports had surfaced of the Bharti-Wal-Mart talks having broken down.

Mr. Mittal has so far given few details of the collaboration between the two companies but it has been stated that the MoU will allow the two companies to study and evaluate the retail market in India and identify business opportunities together within the existing guidelines.

Wal-Mart is the largest retailing company in the world with revenues of about $320 billion. It has also a procurement centre in India and plans to source products worth about $2 billion this year.

Under the existing foreign direct investment (FDI) guidelines for the retail sector, 51 per cent foreign investment is allowed in "single-brand'' retailing with prior government permission. FDI is also allowed in wholesale business. The condition of "single brand'' means that all products sold by the stores would be only of one brand, such as the existing franchise stores which sell a single brand like Reebok or Sony.

Later speaking at the India Economic Summit, Reliance Industries Chief Mukesh Ambani welcomed the development, saying that the Indian retail market had space for at least six to eight large players. He was in favour of FDI being allowed in the multi-brand retail format as he felt that the sector offered immense potential. He said the retailing potential could not be captured by any single large company or multi-national corporation.

Mr. Ambani said the retail segment had the potential to provide huge employment opportunities. He maintained that as many as 10 to 15 million jobs would be generated over the next three to five years due to the explosion in the retailing sector.

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