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Thu, Dec 28, 2006 - Page 10 News List

Bharti plans investment of US$7 billion in stores

AFP AND AP , NEW DELHI

India's Bharti Enterprises, which tied up with Wal-Mart to start a nationwide chain of retail stores, said it will invest approximately US$7 billion in the project by 2010, a report said on Tuesday.

The group, which owns the country's top private phone firm, said it will set up 200 large stores and hundreds of smaller ones to cater to the increasingly affluent Indian middle class, estimated to be made up of 300 million people.

"Depending on what we do in real estate and logistics, we will invest around seven billion dollars by 2010," Sunil Mittal, chairman of the group, told the Business Standard newspaper.

Mittal told the newspaper that the group's realty company will identify property for the venture, from which he expected to earn US$1 billion to US$2 billion in the same period.

Last month the group tied up with Wal-Mart, the world's largest retailer, to open stores that would be owned by Bharti and run under a Wal-Mart franchise.

India does not allow foreign investment in retail except for single-brand stores such as Nokia or Nike.

Other foreign groups such as Wal-Mart have to sign franchise deals with local companies to enter the Indian market.

The newspaper report said that the front-end stores would bear the Bharti name, but talks were on to include the Wal-Mart brand as well.

Organized retailing makes up only three to five percent of India's retail business, with the rest dominated by nearly 15 million traditional mom-and-pop stores.

Earlier this year, India's biggest private firm, Reliance, started opening a chain of supermarkets as part of a multibillion-dollar retail rollout.

The company said it aims to have 4,000 stores by 2011, with an annual sales target of US$25 billion.

Other major Indian business houses such as the Tata group and the Aditya Birla Group are also moving into the sector, which has annual turnover of about US$300 billion.

That figure is expected to double by 2015, the consultancy PriceWaterhouseCoopers firm said.

Meanwhile, media reports yesterday said that India is likely to further open up its vast retail market -- one of the world's fastest growing -- to foreign investment.

The government is considering opening up sectors like electronics, sports goods and building equipment, where local businesses are not well established, the Times of India newspaper reported, citing unnamed sources.

Asked about the report, Commerce Minister Kamal Nath told reporters that Prime Minister Manmohan Singh had asked him to look into the issue, but he gave no further details.

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