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India's 40 million shopkeepers brace for Wal-Mart effect

The chain's plans to open stores there in 2007 have met with resistance from the far left.

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Somdutt's ramshackle storefront is an odd place to hear mention of Wal-Mart. Not 10 steps from his stall, where he sells packing materials, there is a goat, several squatters huddled around a fire, and an ancient banyan tree filtering the last rays of winter sunlight.

Mr. Somdutt, who offers only one name, doesn't exactly know what Wal-Mart is. But he knows the world's largest retailer is coming to India, and he wants it stopped.

"These big retail stores are going to snatch away our livelihoods," says the white-haired patriarch, who has worked this stall for 25 years.

Following the footsteps of exotic locales such as Hercules, Calif., and Toledo, Ohio, India is fighting Wal-Mart's announced plans to begin operations here in 2007. For many, the so-called "Wal-Mart Effect" is more than just a matter of losing shops in historic downtowns. According to a study by AC Nielsen, India has more shops per capita than any other nation in the world, meaning that the advent of "big-box retail" could impact 40 million shop owners and employees.

Analysts say retailers such as Wal-Mart are eyeing India's rising middle class, and a retail market that could be worth more than $600 billion in less than a decade.

But communists and trade unions have forced a government inquiry into Wal-Mart's plans, and they made the issue part of a nationwide strike that nearly shut down Calcutta's airport last week.

It is an important moment for India's economic reform effort, and for the country's far left, which spawned the world's first democratically elected Communist government in 1957. Often ignored during India's recent binge of free-market reform, the left is now hoping to stir the nation's unease about foreign corporations – and few names serve better than Wal-Mart.

"The left has to change its tactics," says Shameem Faizee, secretary of the National Council of the Communist Party of India. Until now, it has given the government too much latitude, he says. "We have to consider how we can stop the government."


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