The poor infrastructure, vast regional differences and laws limiting foreign firms to cash-and-carry wholesale outlets and franchise tie-ups with local partners in the $450 billion retail market, it’s been a challenge all three large retailers have agreed to take. Since the recession has begun and Westerners are slow to pick-up their spending, these retailers believe it’s crucial to expand into the Indian marketplace.

“The supply chain is one of the big challenges,” Raj Jain, chief of Wal-Mart India. “We are willing to invest whatever it takes in the supply chain, the back-end. But that in itself won’t deliver all the efficiencies,” he said, arguing for fully opening up the sector.

Carrefour also struggles to maintain it’s supply chain.

“There are many, many layers, with commission agents, wholesale markets, distribution agents which increase time to market and costs,” said Yannick Douville, a Carrefour director.

Even the wealtiest of the world’s top retailer, India is a challenging market to step into because of things such as tiny farms and differential policies and taxes in every state.

ABC News gave a example of what the retailers are doing to ensure quality and accuracy in their supply chain and business plan. In the village of Haider Nagar in Punjab state, where Wal-Mart sources vegetables such as cauliflower and gourd, the retailer built toilets to prevent soil contamination, and teaches farmers about transplanting and nutrient management and the use of low-cost innovations to get a higher, better yield.

Recently, the government unveiled concessional duties and tax exemptions for refrigeration units and allowed external commercial borrowings for cold storage facilities. 

But, is it enough to invest? 

“Unless there is a big front-end no one’s going to invest billions of dollars in a cold chain or supply chain just to sell to some mom-and-pop stores,” said Technopak’s Singhal.

“Higher tariffs have never proven to be a wise solution for American economic growth,” said Stephanie Lester, RILA vice president for international trade. “RILA supports economic engagement with China and addressing our trade gap with China. We firmly oppose legislation that threatens to cut off access to the U.S. market and drive up prices for consumers.”

RILA has warned that higher tariffs would negatively effect U.S. businesses and its consumers.

To read more about RILA’s reaction, click here.

“We expect these numbers to continue to climb as merchants and their customers move away from recession and back toward normal shopping habits,” states  Jonathan Gold, NRF VP for supply chain and customs policy.

In March, US container ports handled more than 1 million teu, up 6% year-on-year. April is expects about an 8 percent gain then from last year. 

Hackett Associates founder Ben Hackett said: “Retailers were maintaining lean inventories during the recession, but are carefully building back up.” 

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