On Wednesday, Wal-Mart and its Indian partner Bharti Enterprises announced that two are separating from its joint venture relationship. The two will run the business independently in India.
Wal-Mart Stores Inc. and its Indian partner Bharti Enterprises are breaking up their joint venture. Wal-Mart will purchase Bhakti’s 50 per cent stake in Bharti Wal-Mart Pvt Ltd. The two will independently own and operate split businesses in the country. The Bharati runs nearly 20 wholesale stores in India under the Best Price Modern Wholesale Brand.
The Bharti will acquire compulsory convertible debentures (CCDs) held by Wal-Mart in Cedar Support Services,a company owned and controlled by Bharti under the joint venture agreement signed between the two business giants.
The relevance of Foreign direct investment lies in when a company makes an investment by buying another company or diversifies business in a country other than in which it is based.
It can be considered as a major development in FDI in retail sector in INdia.
Investment made through FDI becomes a source of external finance which could strengthen the economy.