Cellphone firm Bharti Enterprises, which plans to enter India's retail market with Wal-Mart, said on Friday its agreement with the US-based giant was within the rules set for investments in the sector.
"The joint venture on retail has been finalized and legal agreements are being worked out," Bharti Enterprises chairman Sunil Bharti Mittal told the Press Trust of India (PTI) news agency.
"We expect to sign an agreement in the coming weeks," Mittal said, adding that Bharti's joint venture accord with Wal-Mart would be for cash-and-carry and back-end linkages.
"Wal-Mart is going to apply for a joint venture [permission] only in the area where policy exists," Mittal said.
NOT ALLOWED
India does not allow foreign investment in retail except for single brand stores such as Nokia or Nike, and foreign groups including Wal-Mart have to sign franchise deals with local companies to enter the market.
"We will proceed with our plans unless the government specifically asks us to stop," Mittal added.
Mittal's comments came in the wake of protests by India's communists, who offer crucial outside support to the Congress-led pro-reform government of Prime Minister Manmohan Singh.
Communist activists protested in the Indian capital New Delhi on Thursday as Wal-Mart vice chairman Michael Duke arrived to meet officials and study the market.
Shop owners and state-run supermarkets in India's financial capital Mumbai protested Duke's visit on Thursday.
During his stay in the country, Duke was to meet a series of top government officials to get a clear picture of policy guidelines in the retail sector.
Congress party chief Sonia Gandhi has voiced reservations about allowing foreign retail giants into a country dominated by small "mom and pop" stores.
But on Friday, Agriculture Minister Sharad Pawar said farmers would benefit from the Bharti-Wal-Mart venture because they would get a good price for their produce.
"From this angle, efforts which Bharti group is making are certainly useful for India's farming community," Pawar was quoted as saying by PTI after a meeting with Duke.
STUDY
Singh's office has asked the trade ministry to commission a study to assess the impact of large-scale retail operations on small retailers, PTI said.
To counter weakening domestic sales, retailers such as Wal-Mart, France's Carrefour, Germany's Metro and Britain's Tesco have been pushing to enter India.
A rapidly growing affluent middle class estimated to make up as much as one-third of India's 1.1 billion population spends an estimated US$300 billion annually on shopping.
That figure is expected to double by 2015, according to consultants PriceWaterhouseCoopers.
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