Wal-Mart could use its cash & carry business, Sam's Club, to gain a foothold in the Indian grocery market before Tesco, according to a new IGD report.
Indian state rules forbid foreign direct investment in grocery retail outlets, which means western retailers could only enter the market through a joint venture with a local operator.
However, the rules do not extend to wholesale businesses, making entry for Wal-Mart more straightforward than for other major players. Tesco's lack of a wholesale arm means it would probably have to tie up with a local operator until the rules were relaxed, which experts expect to happen at some point. Tesco has been linked to a deal with Bharti Enterprises, a telecoms company rumoured to be interested in the Indian retail sector.
Germany's Metro operates two cash & carries in India but was not expected to open any retail outlets in the country, the IGD said.
The report, Retailing in India, says: &aquot;Wal-Mart is likely to be the first of the global retailers to enter the Indian market. It has lobbied the Indian government over foreign investment legislation and has sought guidance on the market.&aquot;
The Indian food retail market is expected to more than double by 2020, from $187bn now to $420bn.