Khozem Merchant

NEW DELHI — Wal-Mart, the world’s largest retailer, is set to meet Indian government officials today amid signs that New Delhi might relax its resistance to foreign investment in retailing.

Kamal Nath, commerce and industry minister, has been pushing reforms that could lead to global chains such as Wal-Mart and Carrefour investing in India’s fragmented market, which includes millions of tiny, ramshackle shops.

"The government has made its move and (reform) seems imminent," says Kishore Biyani, whose Pantaloon value stores and shopping malls have earned him the title of "India’s Mr Wal-Mart".

In addition to meeting government officials, John Menzer, who heads Wal-Mart’s international business, will resume talks with the putative local partners he will need since New Delhi is unlikely to allow majority foreign control.

The government is debating whether to limit foreign direct investment to 24% or 49%. Bankers and industry executives expect the lower level as a concession to left-wing opponents of retail reform in the ruling coalition.

Politicians say foreign entry threatens the livelihoods of the "mom and pop" shops that account for 98% of the industry.

Reformers say foreign entry could bring greater investment in cold-storage infrastructure, improving India’s undeveloped supply chain for perishable foods, and creating jobs.

US retailer Wal-Mart and Carrefour of France, both already in China, where foreign retailers were allowed in more than a decade ago, see India as the next big Asian opportunity.

According to bankers familiar with the sector, Wal-Mart has held discussions on possible partnerships with Mahindra & Mahindra, a large tractor and sports utility manufacturer, and the Mumbai-based Jatia family, which has built up the McDonald’s fast-food franchise. Neither company would comment.

Some foreign retailers have already been creatively bypassing protective restrictions by operating ostensibly as wholesaler suppliers while franchising their brands to Indian partners.