Wal-Mart Expanding to India

Like many investors, Wal-Mart smells opportunity in India.

Yesterday Wal-Mart announced that it has formed an alliance with Bharti Enterprises Ltd. (India's leading telecommunications company) to open hundreds of stores in India over the next several years.

According to Investor.com, "Under the deal, Wal-Mart and Bharti Enterprises will set up a joint venture to manage procurement, inventories and logistics, while stores will be set up under a franchise agreement, said Sunil Bharti Mittal, the chief executive of the Indian company."

The Indian retail market is worth approximately $200 billion currently, and this figure is growing by about 30% a year. According to Technopak Advisors (a consulting firm)…

Organized, or branded, retail makes up only 3 percent of the market, compared to China's 20 percent and Thailand's 40 percent, but is forecast to rise to 15 to 18 percent by December 2011."

Until recently, large retailers such as Wal-Mart and Target have not been allowed to set up operations in India. As The Daily Reckoning notes: "When India opens its markets [to foreign competition], there will be a massive influx of investment spending. Stores will have to be built. Access roads will be carved into the countryside. Pipes will be laid. Wells will be built. And on top of that, salaries and benefits will be paid to thousands and thousands of workers."

No doubt Wal-Mart's effect on the Indian economy will be massive. Just look at Walmart's effect on the U.S. economy.