Walmart in India: Facing the Challenges of Restricted Indian Forect Investment Retail Policy

Sendy Inka Casella , Siti Daulah Khoiriati

2015 | Skripsi | Ilmu Hubungan Internasional

ABSTRACT India is a country which has the largest population after China. In addition, India is known as a closed-state and its market is difficult to be dominated by foreign companies. At first, the government of India did not limit foreign direct investment in India. However, after World War 2, India began to limit and restrict their policy towards foreign direct investment, including restricting the foreign ownership. Foreign direct investment has a crucial role in economic growth in India but here the government of India stipulates that multinational companies which want to expand in India must use 30% of their products from local Indian manufacturers. On the other hand, Walmart as major retailer of the United States is eager to open their first retail store with 100% ownership, while they have been running a business in joint venture with Bharti Enterprise. However, in achieving their goals, Walmart experiences difficulties and is hampered by sourcing norms in India. Based on the background of issues above, this thesis will analyze the things which underlies Walmart to ambitiously have 100% ownership of the retail business in India. In this regard, this thesis will also focus on foreign direct investment policies in the retail particularly in India, Walmart’s path in India since the beginning of the joint venture, as well as analysing the negotiation process conducted by Walmart to get leniency in terms of ownership and also sourcing norms. Thus, what strategy that Walmart took to continue its operation. This thesis will also conduct an analysis using a conceptual framework developed by Raymond Vernon's Sovereignty at Bay that is associated with the theory of protectionism. Vernon argues the role of multinational companies have also proven that they are able to provide domestic economic prosperity and set up an effective production of items in a much more efficient scale than the government does. The government of India, on the other hand, is still trying to protect millions of small traders who become one of the pillars of Indian economic dominance over multinational companies

Kata Kunci : Pembangunan Ekonomi - India