Posted by: John Elliott | May 3, 2007

Wal-Mart meets opposition even before it arrives

India usually waits for foreign investors to set up shop before taking to the streets in opposition – as companies like Coca-Cola (KO) and Kentucky Fried Chicken have discovered in the past. But Wal-Mart’s (WMT) reputation precedes it to such an extent that protests have started even before it opens up. There were small but vocal street demonstrations when Michael T. Duke, Wal-Mart’s vice chairman, visited India in February to look at retail prospects.

Last week’s opposition became more vocal when Wade Rathke, a leading United States-based anti-Wal-Mart activist, came to oppose the company opening a wholesale business – showing how protest groups have gone international to fight globalization.

Wal-Mart was selected at the end of last year by Sunil Mittal, founder and chairman of Bharti Enterprises, India’s leading mobile phone company, to be his partner in a country-wide wholesale-retail venture. He had intended to link up with Tesco of the UK, but Wal-Mart offered a more impressive and faster investment rollout.

Rathke heads a U.S. community organizations’ group called Acorn, whose activities have included opposing Wal-Mart’s entry into Florida. He told a conference of traders and political organizations last week that he wants to “stop the corporate hijack of Indian retail,” and said the government should introduce blocking legislation that would catch big Indian-owned retail companies as well as foreign direct investment (FDI) by Wal-Mart and others.

This has broadened what was previously a straightforward debate over the role of FDI to include Indian retail companies that, up until now, have been encouraging opposition to FDI in order to buy time to build their businesses. Foreign retailers have been banned since the mid-1990s from directly investing in Indian stores, though franchise partnerships with local firms and wholesale (cash-and-carry) operations, have been gradually permitted. The restrictions historically stem from politicians’ fears of upsetting 15 million small mom-and-pop shopkeepers who account for 97 percent of $250-300 billion a year sales.

Opposition has been strengthened in the past couple of years by the big Indian businesses, and this has been backed by Communist-led leftist political parties. Indian companies opening retail stores include three large groups – Reliance, Tata and Birla – while long-established offshoots of two big multi-nationals – Unilever and British American Tobacco – are in distribution. The government wanted to relax the restrictions last year, arguing that this would give both consumers and farmers a better deal. Consumers would get improved quality at better prices. Farmers could bypass an inefficient and often corrupt government-controlled distribution chain and sell direct to supermarket chains that would help them grow better quality produce. That should significantly cut wastage – currently 40 percent of fruit and vegetables sent to urban markets rot on the way.

Kamal Nath, India’s enthusiastic commerce and industry minister, virtually promised foreign retailers that they would be allowed in by the end of last year. But the industrial and political opposition increased, and Sonia Gandhi, president of the Congress Party that leads India’s coalition government, called for small shopkeepers to be protected. A government-commissioned inquiry is now looking at the impact of supermarkets, and there is no prospect of Nath being able to relax FDI restrictions, except possibly for electronics and other specialist stores.

This has led Wal-Mart to exploit a policy loophole and plan a wholesale joint venture with Mittal that will provide procurement and logistics services for 100 percent-Bharti owned supermarkets. Tesco and other companies have been looking at similar side-door entries. Wal-Mart is therefore now being attacked for exploiting the wholesale loophole as well as for being an undesirable multi-national.

In an attempt to stop the development of supply chains that would provide supermarkets with better quality produce than small mom-and-pop shops, Rathke also appealed last week to farmers not to sell direct to supermarket companies. “We will conduct awareness programs at grassroot levels so that farmers don’t sell directly to any of these companies,” Rathke said in Mumbai. “Farmers need to understand the long-term plan of these corporates. Once a farmer is into this vicious circle, maybe two to three years down the line, he will be left with no option but to surrender his land to one of these corporate giants.”

Before Rathke arrived, various traders and other groups had been organizing protests against FDI of any sort in supermarkets. India’s leading communist party – the CPI(M) – is now finalizing a policy statement that will call for restrictions on the location of all stores and how fast they can proliferate, but it will only ask for price protection – not a ban – on supermarkets buying from farmers.

It is too soon to forecast how effective the campaign will be. Demonstrations are planned in August, and Rathke is expected back a couple of months later, but it seems unlikely this will seriously slow down Indian groups. Wal-Mart however is sure to be harassed through to the beginning of next year when it is expected to start operating. Mittal said a few days ago that the protests had been less than he had expected; but he may still come to regret switching from Tesco which arouses far less international passion.


  1. Wal-Mart is American? Could’ve fooled me, everytime I walk in there all I see is “Made in China”.

  2. i run a small shop in india.
    i am planning to shutdown my shop and learning store managing skills.
    welcome wall mart to india.

  3. Walmart is facing lot of opposition in America itself. HOw many city council has voted against Walmart coming to town as they fear it will affect small business.

    Democratic presidential candidate John Edwards is fighting against walmart trade practices. So many people is USa are fighting against walmart. This is the fact. Just search google walmart opposition
    Then there is the wakeup walmart campaign which is agressive with TV ads in their campaign against walmart
    IF this is the case in Free for Trade capitalist country like USA,
    Why then there will no opposition to walmart in a developing country like india?
    Guys get the facts before speaking. Issue is opposition to walmart and dont divert the issue towards anti indian and anti american comments.

    Hey John elloit,
    MAke sure you check the facts before writing anything. Opposition to walmart is not only in India but its also here as well in america.
    Just read the article from the reputed paper USA Today

  4. I think we are wasting time (that includes me as well) by indulging in this debate and are just being romantic that our voice/vote will have an impact.

    Here is a tip for those who want their voices to be heard/drafted as legilation – start your business, earn lots of money, make lots of political donations and get your bills passed by the government. That is how the system works – whether it is the US or India or any country – democracy, communist regime or dictatorship.

  5. After reading some of the comments of my fellow Americans, I can say that I am honestly ashamed. Anyone who criticizes Indians working here on H1B visas is simply ignorant of the facts of life in modern America. Our leading high-tech companies are screaming out to the government to increase the H1B caps because they simply cannot find enough people to fill highly skilled jobs. Americans are not filling in the gaps. Indians, Chinese, Muslims, and others contribute far more to the USA than most people realize. It is their collective presence here which instills diversity and makes this country great. The day we turn our back on these people is the day we have bankrupted the American Dream and have lost our economic sanity. I challenge anyone who doubts this to read up on the facts and educate themselves about how foreigners contribute to our economy. Also, take the time to visit India or China and observe how hard their young people work and struggle to prove themselves academically. You will realize then that they are being hired in the US because they are more then qualified for the jobs they do; they compete for and win those jobs because they are often simply the best candidates.

  6. You either have Globalization or don’t. Can’t have it both ways.

    The US wanted globalization when it was in a position to supply to the rest of the world, and when others were lagging behind in technology. Now they have caught up in the game and Globalization is suddenly hurting the US.

    Mind you, everything is taking place legally. It is the American businesses which have decided to shift the manufacturing to/procurement from a cheaper location, and it is the ENLIGHTENED American consumer, who is buying Chinese goods or Indian services.

    The same applies to India. It will have to learn to live with foreign businesses if it wants to supply to foreign countries.

    Globalization is no one way street.


  7. Hi John
    I am amazed at the anti-British and American sentiments expressed perhaps not intentionally, by fellow indians such as vairam et al. My amazement turns into bewilderment when I realise that as Indians we are taught to belive in Karma. How can we then ignore the freedom that Britain brought us???

    1. British freed India from centuries of corrupt medieval rule where Hinduism(83.5 %) of India had no place. Without Britain we would have had no freedom and your wives and sisters would have been raped by mongol invaders…..

    2. British removed casteist medieval practices such as burning of widows on funeral pyres of husbands and this forum space is too short to list all the medieval practices that were abolished under British Reformists eg Morley Minto Reforms, Hindu Widow remarriage Act…oh and the English languge to unify our linguistic provinces and give us access to scietific thought…most of it invented in the west….

    3. Almost all the major universities, railoroads, courts, charity and infrastructire has British vision even today in India.

    4. The argument that British contribution to India was based on purely selfish interests is false and hypocritical. Britain could have done much less (like our previous mughal rulers) and left us far more bankrupt than some of us make it out to be.

    5. British and Americans changed with time (abolished slavery, abolished racism) and give due process in hiring and firing and most of all let many of us into their universities and colleges. Partly motivated by selfish reasons ….yes agreed..but they were obligated to do ZERO for you and me and us. Did we change as they did? Did we abolish the caste system? Did we stop making slaves out of our own people who are poor and illiterate and are often child beggars?

    Dear fellow Indian friends the Western contribution to protect the freedom and culture of helpless minorties (Hindus , Jews) etc in hostle regions cannot be ignored…it would be wrong to do so in the true sense of Karma…I hope that we work with British, American and European investors and our own bright minds to build a modern India that will be fair and balanced in its assessment of its engagement with Britain and the United States. If we do this right, we will be in the comity of nations to build spaceships and further the human cause by democracy, freedom and real contributions to science and technology. If we don’t I fear we will be reverted to the blissful medieval state we were in prior to British doesn’t take long for things to change I’m afraid

    Jai Hind and God Bless America
    Heaven’s Light Our Guide — From British India Flag

  8. How ridiculous are the comments from our india-bashing american friends…
    Pls read the article carefully and note the passage: “Last week’s opposition became more vocal when Wade Rathke, a leading United States-based anti-Wal-Mart activist, came to oppose the company opening a wholesale business – showing how protest groups have gone international to fight globalization ”


    MY dear friends india(n) bashing americans …read the article carefully before jumping to conclusion rather than force fitting your ideology in any situation!!!

  9. Just would like to remind everyone that Globalization was essentially an extension of the American idea of free trade. It was supposed to open up new markets for American goods and new sources of raw materials for American factories.

    The guys who thought up the idea just did not anticipate that China & India would prove to be such competition. After all, how could a ‘starving ill educated’ Indian or a non English speaking Chinese pose a threat?

    But things went ‘horribly’ wrong. The Globalization genie is out of the bottle and it would be quite a job to put it back in!

    KS Pillai Cochin India

  10. Hadley V. Baxendale,

    May I please remind you that this country was founded, built and established itself as a country of immigrants. The issue here is not whether Indians working in the US are taking jobs away from Americans. If you really want to tackle that issue, you should ask the CEO’s and Directors of the American companies why they hire so many Indian nationals? Is it because they work harder than Americans or do they work for less money or do they produce better work? The possibilities are endless, but at the top of the ladder resides most “white Americans” not Indian nationals. So maybe you should consult those leaders/executives for an answer.
    Regarding the issue of Wal-Mart in India, that’s a cultural problem as well as an economic one. Granted free markets will allow for change, but it must be done on a graduated level and phased in over time. Rome was not built overnight, nor was America.
    Please stick to the issues people and try not to bring race into it.

  11. Folks – the topic is globalization. This seem to have gotten side tracked with lot of emotions on both sides of the pond. (both ex-British colonies – based on British Financial and Judicial set up ironically!)
    There are plenty of US companies that are doing great business in India. UPS and Fedex for courier…GM India and Ford India (both of whom are opening their second plants in India to meet the high demand). Pepsi and Coke virtually control the beverage market and Frito Lays (Pepsi) is slowly becoming the same dominating giant in snack business as it is in US. There is a McDonald’s, Subways, Papa John’s, KFC, Pizza Hut, Baskin Robbins, TGIF, Ruby Tuesday etc in all nooks and corners of major Indian cities. Motorolla India is giving a strong fight to the market leader (Nokia) in the cell phone market.
    Financial institutions such as Citibank and US insurance companies are not shy of showing their muscle either.
    Companines like Colgate, and Johnson and Johnson have been operating in India for decades and dominate their respective market categories.
    True, India does have restrictions in many industries for foreign investments. On the flip side – US has lot of restrictions for the same in agriculture, steel, aviation and till some extend in textile industries.
    Bunch of protesting people (probably rounded up by a local politician) are not necessarily reflective of 1 billion people’s opinion. The same way Wal Mart is not exactly reflective of American values !

  12. John Elliot,
    Knowing the facts is more important before you pen.
    1.Coca-Cola & KFC had opposition prior to opening & after opening too.
    2.Coca-Cola & Pepsi where charged & proved that they sell different standard (lot of phosphorous: i.e. poisonous & health hazard) in India for which they got caught & got opposition after they entered the market.
    3.Wal-Mart had big time opposition in Tumwater,WA for its store in Tumwater by the local stores. Wal-Mart used back door to get it approved just before the city council put a moratorium.
    4.As stated in earlier comments there are several multinational companies that do & sell business in India.
    5.Opposition to retailers entering Indian market is caution rather than opposition.
    There were oppositions for every business including computers in India.
    Things don’t happen overnight. It took 40 years (1947 – 91) for the people to change minds after the corrupt, illegal trade practices of the British companies & rule from which India got independence. India doesn’t want that to happen. Or open the market & let all companies do whatever they want to do. It is free global market. But it need not be non regulated. US has its own rules & promotions for each of the trade practices it does in spite of global trade. For instance it doesn’t allow Cuban cigar into its country. India buys product from its worst enemy Pakistan. I don’t say that it is wrong for US to stop cuban cigars. As well it is not fair to charge based on your biased opinion that you’re “riding the elephant”.
    It is true that there is opposition for Wal-Mart and other retail business. But it will change. Not at the stroke of a whimsical article. India had a regulated Forex that is deregulated now that you see that the US $ is selling less than $41.Pepsi & Coca-Cola where sent out of the country & they are back in India. It is also true that these two companies killed the entire drink industry by providing at low cost. However, when they captured the market they produced products at their own will (quality & price).
    So, there is a caution by the Indian people & business. The much of the Indian business including electronics is retail business owned by individual or small entity. So those people need to change on how they are doing business. It might become that lot of those small entities might become franchise or managers for these multinational. These big companies still need those small business people. For instance, I have known people who were running their own hand weaving are now working as managers or weavers for big export textile companies in India.
    There is always good part as well bad in the system of big companies. There will be Enrons & Wal-Mart. Also there will be GE, Phillips & Sony. Whether it is a mom & pop stores or 1 big retail store still it involves people. It all depends on how the business is run. There is restrictions for China products (including toys). Bringing Wal-Mart to India in no way will improve the economy of USA.
    Do you know that there are 50 Boeing’s ordered by Indian airline companies?

    The doubt I have is did you write the article after a Lou Dobb’s program on the CNN.

  13. If US has so many indians and other’s like chinese its because they dont have enough number of highly educated people to maintain run economy and honestly do you guys really think that high school drop outs can run NASA or Microsoft or intel ….etc. The gain is mutual so stop being a cry baby. Americans will keep losing jobs to internationals more and more in future .

  14. There is no right or wrong in this age of open economy and globalization and I am all for US brands launching in India and Indians gaining employment in USA and vice versa. At the end of the day it all comes down to CHOICE. As an American, you can choose to NOT hire Indians and yet you continue to do so, obviously because you see an advantage to it and as an Indian, you can CHOOSE to not buy American brands but yet you continue to do so because you crave the quality and brand equity. So net, net we can argue about Indians taking American jobs and American brands thirsty to launch in India but as individuals you all have a choice to do as you please but your decisions remained governed by personal gain and greed. Think about it.

  15. I think Globalization is best for any country irrespective of India or the US.

    Initially its difficult for people because it brings intense competetion and lot of people lose jobs and face hard times, but in the long run its beneficial for society as whole.

    The only things which needs to be taken care is, it should come slowly and steadily and people who are facing the consequences should be made aware of and given proper training and help so that they can survive and be on their feet and dont succumb to the intense competetion.

    Then none will lose jobs and have loss in their business and also the economy will boom and most importantly the consumers and everybody will reap the benefits of the human mind and efforts.

  16. Whether Indian students pay more or less or whether the Indian moon is blue is beside the point. The issue is, as it was in the article, is US globalization in foreign markets, specifically here…India. True, benefits seem to flow in one direction more than the other; however, it does no good to develop into an ad hominem argument…stay on target! Enact restriction on Indian imports until such time as the playing field is level. C’est la vie.

  17. Since when is WalMart an American company acting in the interest of US workers? All WalMart is is a conduit for cheap goods from the Peoples Republic of China. Doing what’s best for WalMart is not best for the USA or India

  18. As an American living in India, the perspective is slightly different than others who have written in. There remains alot of unemployment and poverty. Even though Walmart would create convenience, it would also close down many family run shops. These shops for light bulbs, ladders, auto supplies, etc have been run by families for generation and they fear (which they should, after all look what happened in the US) that Walmart would result in competition greater than they can handle and they would lose their livihoods. Even though everyone in America likes to shop at Walmart, not many can say they are proud to work for them…

  19. Hey, Sachin Shah of New Jersey, We created our country without you and we do not need you to run it.

    Rather than kidding youself that you are doing charity for US, why don’t you go home and do charity for you OWN people in India.

    Rather than coming her to milk our culture for cash, why don’t you save your own people — Hindus and Muslims — back in India instead of turning tail, running out on them and letting them starve like animals?

    Get rid of your caste system, commit to affirmative action like we have and and stop exploiting your own people like animals, starving them to death.

    Trust me, we’ll do just fine without you.

  20. Indian Americans, H1B workers etc, are among the hardest working folk out here in the US. Please do not compare us to people who come in illegally from down south of the US border.
    We pay taxes through our nose too.
    Heck, even the Mexicans work hard, and contribute to the economy, more so than the natives.

  21. Patriots still cant seem to beleive that WalMart is no longer US but just China China and China

  22. Sachin, what is the source for your percentages? They may be correct, but they look suspect when compared to my own experience.

  23. Jeff Patriot, I would like you to comment on Sachin Shah’s post. What would you do if all the Indian’s went back to India and getting “free” education on your tax money since Americans are the only people that pay tax in the United States right? Indians and other nationalities don’t pay taxes at all? If all the Indians went back to India, who would be the doctors, scientist, engineers, etc?

  24. Jeff,

    You make insensitve points. microsoft, ford, amex, ge, union carbide are all american companies as well and they setup and run operations much like British telecom, bmw, toyota, volvo, st.gobain, ANZ.

    The point is indian agriculture is not as subsidized as in the us or europe and with walmart tying up with local land sharks, it is a sourcing (supply nightmare) for a local farmers who own little and cant measure up to walmart’s standards or low cost.

    Eventually the market will correct, but it will be an unpleasant task and life for many. As sachin and Singh have pointed, h1bs are legal here. US govt approves their entry. You can vote for a govt that will ban h1 and many wont come.

    But the difference here is the communist party of india,with its outdated, unwise, impratical and utopian policies that adds to sensational reporting

  25. Acron is doing nothing more than pushing its own agenda. Big super markets will help India streamline the supply chain which is in utter chaos currently.

    On trade side, I agree with Jeff. If India wants to participate, it has to be fully willing. Any trade barrier will hurt in the long run.

    The agony of job loss and change in US business due to H1-B is understandable. However, it should be kept in perspective that these provisions helped US companies to survive the low cost globalisation trend and emerge the leaders again.

  26. Hi all, I think its not matter of obsession but understanding positions of both government, corporate sectors, people, society and most important, community thats going to be affected.

    With all due respect to Wal-Mart, I think there is nothing wrong with Wal-Mart or for that matter Tesco opening shops on Indian soil if indian companies like Infy, Tatas and Wipro have done same in states.

    Its a topic that is horizontal to all sectors, when Indian bpo firms started taking over the outsourcing jobs to Indian soil most Americans and Europeans started to display thier frustation, but eventually we all have to understand the importance economy of scale. Guys/gals do note business is not done with emotions but with capital and to get a competitive edge you have to keep your cost of operations lower than your competition to defeat on price. I feel its now india’s turn to practice what we preach by allowing a smooth transition of companies like Wal-mart/Tesco/Carefourr into india.

    All you indian friends out there, do note that these mom-pop shopkeepers have not faced competition for centuries now, and their attitudes towards customers is ridiculous so everyone has to strive towards survival, everyone has to face competition so why not they? As far as poor farmers are concerned, my point of view towards them is I pity them, as neither government nor anyone else can do or rather thinks about them whilst drawing policies.

    So if indian mom-pop shops are afraid of competition they should have thought about it long before, the government has opened the gates to FDI retailers only now, my question is what were these mom-pop shop owners been doing for last 67years, nobody restricted them to open chain like wall-mart, i think india was equally big market for superchains like any other developed country.
    on government front, i can only say that they open the flood gates and than leave rest to people to fight for survival, i think government should have given opportunity for local companies to establish before opening FDI in retail, but thats something out of governments head. so lets drop it.
    free trade free communication.
    thanks for your time to bear this comment.

  27. I agree with Jeff Patriot

  28. Whatever would we do if Indians indeed took back:
    “38% of doctors in USA are INDIANs.
    12% scientists in USA are INDIANs.
    36% of NASA scientists are INDIANs.
    34% of Microsoft employees are INDIANs.
    28% of IBM employees are INDIANs.
    17% of INTEL scientists are INDIANs.
    13% of XEROX employees are INDIANs.”

    Why, we might re-hire the Americans who were displaced and elbowed aside by these foreign workers. All these figures prove is that our visa caps are way too high.

  29. Undesirable multi-nationals? Apparently, India is the Wal-Mart of guestworkers.

    Sachin Shah wrote:
    Sure, no problem, we will take back the following
    38% of doctors in USA are INDIANs.
    12% scientists in USA are INDIANs.
    36% of NASA scientists are INDIANs.
    34% of Microsoft employees are INDIANs.
    28% of IBM employees are INDIANs.
    17% of INTEL scientists are INDIANs.
    13% of XEROX employees are INDIANs.
    Oh, and all of them pay as much Tax as anyone else in this country…

    Maybe we are looking at the H-1B problem all wrong, more H-1Bs and eliminate the EB visa. Micoroft, Xerox,Intel and IBM would probably lobby for that!

  30. It’s not about loosing jobs or money to foreign nationals but it’s about what it costs for many families against one corporate gaint. If you know anything about how the markets/shops are operated in India, you would understand. There are no chains or big shops but 95% of them are independently owned. They cannot compete with Gaints like Walmart and several families are going to get hurt by this. Can you imagine putting up in your retail shop in US and competing with all these gaints and that’s why you don’t see any independently owned businesses much in US but chains all over making rich the richer.

  31. Ditto to Jeff Patriot. I am fed up with Indians telling me that it’s no hardship for an American to lose a salaried job to outsourcing, because we can just live on stocks and investments or open up an international business to ‘compete,’ and if we don’t just surrender our professions and take to this new world order then we must be stupid or lazy. If we can’t expand into their country the way they are into ours, then the game table is definitely tilted.

  32. Jeff
    You are incorrect.We do not want “Walmart” .They are so many International brands in India-Motorola,Nike,Reebok,KFC,Mcdonalds,Burger King , Subway and the list .Indian do not want Walmart for their unfair pricing and incorrect payrolls.Forget India, so many Americans themselves , do not want to see a Walmart in their neighbourhood.

  33. Jeff Patriot, Indian Americans (including H1B workers) pay more tax per-capita than any other ethnic group,including white Americans. It is actually you thats getting freebies from my tax dollars.

  34. H1B workers pay federal tax, state tax and also contribute to SSN & Medicare even though they may never reap any benefits. So it is not fair to say they are getting free education on your tax dollar. Oh did I mention many of them come here on student F1 visas paying out of state fees and help reduce your kids in-state fees.

  35. Countries want free trade with the U.S. as long as it means we do not stop them from selling goods to us or us sending jobs to them. Once we try to enter thier markets they enact barriers. China, India and Japan are all perfect examples. The U.S. needs to offer free trade to all countries provided they do the same to us. Any barriers they place on our goods should be placed on thiers, only by doing this will free trade really occur. The current policy is bankrupting our country in the form of the trade deficit.

  36. Sure, no problem, we will take back the following
    38% of doctors in USA are INDIANs.
    12% scientists in USA are INDIANs.
    36% of NASA scientists are INDIANs.
    34% of Microsoft employees are INDIANs.
    28% of IBM employees are INDIANs.
    17% of INTEL scientists are INDIANs.
    13% of XEROX employees are INDIANs.
    Oh, and all of them pay as much Tax as anyone else in this country…

  37. India wants it both ways. They want to participate in the global economy when it means offshoring jobs from the USA to India. But heaven forbid they open a supermarket owned by a US company.

  38. Now, what is “elephant” about India?

  39. So India doesn’t want people from other countries taking their jobs, and sucking freely from their economy. Sure, no problem. Just tear up all of the outsourcing agreements, take back all of the H1-B visa workers that are over here, and stop getting free education on my tax dollars and I will stand right next to the Indian nationals and protest away.

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