Fulfilling India's Economic Promise

Federation of Indian Chambers of Commerce and Industry (FICCI)

By Mike Duke

October 25, 2010

Federation of Indian Chambers of Commerce and Industry (FICCI)

I especially appreciate Rajan Mittal’s energetic leadership of FICCI. 

At Walmart, we’ve really come to know and appreciate Rajan through our joint venture with Bharti Enterprises.

I’d also like to thank Minister Sahai (sah-hi) for joining us.

I look forward to your remarks, Mr. Minister.

***

I must tell you…I can’t think of a more exciting time to be in India.

Over the last few days, I’ve met with customers in their homes, with associates in our stores, and with government leaders.

I’ve visited kiranas and met with supplier partners.

And with every meeting, I’m more impressed by the energy and the economic promise that is alive in India today.

I love that India’s economy rewards ideas, knowledge and entrepreneurship.

I see a country with a dynamic workforce, growing incomes and millions rising into the middle class.

This is clearly a time when Indians are engaged in a national conversation about the country’s future.

You can’t pick up the newspaper without seeing an article about what India should do next to tame inflation or drive growth.

The question isn’t when to get this economy growing.

It’s how to grow it in the best way for the Indian people today and for future generations.

For all these reasons, I’m glad to be with you… and to offer our view on the contribution Walmart and modern retail can make to India’s economy and the lives of its people.
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For us, it all starts with the vision of our founder, Sam Walton.

He once said these words: “If we work together… we’ll lower the cost of living for everyone. We’ll give the world an opportunity to see what it’s like to save and have a better life.”

Sam Walton understood the common aspirations of people everywhere. No matter where we live, we all want a better life.

This grounding in our mission of saving people money so they can live better sets Walmart apart.

Our commitment to the “live better” part of our mission means that we use the size and scale of our business to make a difference on social issues… like sustainable agriculture, worker training and economic opportunity.

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Today I’d like to make two announcements to show the contributions that we can make in these areas.

I’ll start with agriculture.

At Walmart, we’re already making a contribution to Indian agriculture through a successful direct farm program in Punjab… and we just started one in Delhi.

We’re currently buying fresh produce directly from over 600 farmers. And we’re working with them on best practices to help increase their yields and grow their businesses.

Today I’m pleased to announce a new goal to buy directly from 35,000 small and medium farmers in India by the end of 2015.

We will work with these farmers on crop management and we will provide more direct market access for their produce.

We will train them to grow food more sustainably…using less water and optimizing the use of pesticides and fertilizers.

By purchasing directly and helping these farmers operate more efficiently, we estimate that they will see a 20% increase in income.

This effort will also have a multiplier effect across the agriculture industry. We believe this program can benefit 1 million Indian workers on the farms or others involved in agricultural production.

We’re confident that with these steps, we can and we will make a difference for farmers and farm workers.

And as we grow in India, we’ll lift up the lives of even more people in cities and rural communities across the country.

Education and training are vital to unleashing the full potential of India’s workforce.

That’s why, two years ago, Bharti-Walmart pioneered our first training center in a public-private partnership with the Punjab government.

This was India’s first special skills training center to help young people meet the requirements of the growing retail industry.

And we’re very excited to have opened a second training center in collaboration with the Delhi government.

So far, more than 3,400 students have achieved a certification. And over 1,100 of those students have been placed in jobs.

I’m pleased to announce today that we will be adding a third skills training center in Bangalore within the next couple of months.

We expect our skills training network to certify more than 40,000 students over the next five years and place 15,000 of these students in jobs.

***

These announcements are a direct outgrowth of our existing business in India.

And I want to say that we’re very pleased with the Bharti-Walmart joint venture.

We are building a successful business … in India … for India.

Since we announced the joint venture three years ago, we’ve opened four cash-and-carry stores. And we’ll open another store in the next 45 days.

Even more promising is that Bharti-Walmart expects to open 10 to 15 wholesale cash-and-carry stores within the next two years.

These stores will provide a place for members to buy a steady supply of quality products at affordable prices.

And when we complete these wholesale stores, we expect to create another 5,000 jobs.

What’s most important is that with every new store and every new job, we can change a life.

Like the story of the former pushcart vendor who now works for us. He’s told us how much he values having a job with a steady income, regular hours and days off. ...A job that allows him to work in a safe, clean and air-conditioned environment.

At Walmart, we want to open more stores…create more jobs…and change more lives.

While the discussion on FDI continues, we stand ready to contribute more.

And if FDI in retail is opened up, we can contribute more.

We applaud the steps that have been taken to have an open, thoughtful and forward-moving discussion.

And we respect the care with which the government is treating the issue of FDI in retail.

I’m encouraged by the positive response to FDI I’ve heard from many quarters throughout this visit.

The discussion paper that the government put forward in July was a positive step.

Multi-brand FDI is a huge opportunity … for organized retailers like Walmart … and above all for India.

That’s why we support opening up the retail sector 100% to foreign direct investment.

We understand the sensitivities around the issue and the government’s view of taking a calibrated approach to the opening of the sector.

Let me spend a couple minutes highlighting the contributions organized retail…and particularly Walmart… can make with more open FDI in retail.

First … as I’ve already mentioned there is a great opportunity to support the Indian farmer and sustainable agriculture.

We can also make a difference in reducing waste and increasing efficiency in the perishable food supply chain.

While there is great pride in the self-sufficiency of Indian agriculture, the fact is that today 30 to 40 percent of fresh produce in India doesn’t make it to the consumer.

Modern retail will invest in a sustainable food supply chain for India’s growing population.

I also believe that by offering our expertise and technology, we can help increase food safety and quality, and meet the growing expectations of Indian consumers for better food hygiene.

Second, global retail partners with India can help create opportunity for small and medium enterprises.

SMEs are the backbone of this economy. They produce, export and employ.

In the Bharti-Walmart cash-and-carry stores, we source more than 90% of our products locally.

And we truly view our suppliers as partners.

Let me give you just one example.

In Punjab, we have worked hand in hand with a woman-owned SME called Spicy Treat pickles.

We’ve helped them improve standards in their production facility and trained their workforce to operate in more hygienic conditions.

And we’re helping move Spicy Treat pickles to GFSI…or Global Food Safety Initiative certification… so their products can be sold globally.

We’ve seen our business create the same opportunity for suppliers in all of the countries we operate in. Small and medium sized food processors are able to develop and sell more product, as they become part of our private label brand.

And that touches on another benefit for SMEs … export opportunities.

Historically, our experience has been that as our retail operations grow globally, suppliers have a chance to grow with us.

As we get to know their business and their local product, they gain exposure far beyond their country markets. And, they can leverage the reach of our business to expand their own.

In fact, just this past month, Bharti-Walmart hosted a summit to showcase 27 top Indian food suppliers to our international retail markets -- like the U.S, U.K., Latin America, China and Japan.

The third area where we believe FDI in multi-brand retail can contribute is job opportunities.

It’s estimated that organized retail can create 2.3 to 3 million jobs in India over the next five years.

And these will be good jobs that are very well suited to a young Indian population entering the workforce.

They will enable workers to continuously improve their skills and grow and advance.

At Walmart, we recognize the importance of opportunity.

In the U.S., 70 percent of our store management started as hourly associates.

They started locally and rose through the ranks, and this is true of Walmart all over the world.

In India, every single one of our stores is led by an Indian.

Both Walmart and India need a growing and increasingly skilled workforce.

Lastly, FDI can make a real difference with inflation that has become such a key economic concern for India.
By our estimates, certain increases in direct foreign investment are likely to reduce India’s inflation rate 50 to 70 basis points.

We can do this by reducing waste and driving efficiencies in our stores and supply chain.

Our Everyday Low Cost and Everyday Low Price model saves money for the customer.

This, of course, is not new to us at Walmart.

Economists around the world have studied our model and the difference we can make on driving down consumer prices.

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When you look at the world over the next generation, there are few countries with a brighter and more promising future than India.

How will India realize that future? How will this country meet the demands of booming growth and consumption?

India clearly wants to realize its future and meet these demands as quickly and effectively as possible.

India also wants to do this in a responsible, sustainable and efficient way.

At Walmart, this is the kind of partnership we offer.

And we would be very proud if India continues to see Walmart as the kind of partner it wants in this world.

It’s my sincere hope that Walmart will play a vital role in turning India’s full social and economic promise … into reality.

With multi-brand FDI … I believe we can. And I commit to you that we will.

Thank you for your attention.