Wal-Mart Stores Inc. of Bentonville has slowed its expansion in India amid allegations of bribery as the retailer sought to expand its presence in one of the world’s most populous nations, according to The Economic Times, an India-based daily financial newspaper.

The company launched an internal investigation late last year that ultimately led it to cut ties with two dozen consulting firms working on its behalf, The Economic Times reported. The newspaper said its report was based on interviews with three people with direct knowledge of the situation who declined to be named.

Wal-Mart’s purported move comes less than a year after similar allegations were made concerning its rapid expansion in Mexico.

On Friday, Dow Jones Newswires reported from New Dehli that Scott Price, Wal-Mart’s chief executive for Asia, appeared before a retired judge appointed by the Indian government to investigate allegations that the company’slobbying activities violated Indian laws.

Last month, the Indian government appointed Justice Mukul Mudgal to investigate the allegations following pressure from opposition parties who sought to equate a U.S.-mandated report of lobbying activities in Washington by Wal-Mart with the bribery of Indian officials.

“We are cooperating with the Indian government and the Justice Mukul Mudgal Committee,” a Wal-Mart India spokesman said, responding to a Dow Jones Newswires email seeking comment.

Its growth in India, however, has been much slower because of strict limits on participation by foreign-based companies in India’s marketplace.

Those barriers have been eased some in recent years but remain an impediment to foreign retailers. According to the Retailers Association of India, depending on what kind of store is to be operated, up to 51 licenses could be required from 32 different issuing author ities.

Wal-Mart entered the In-dian market in 2007 through a 50-50 joint venture with Indiabased Bharti Enterprises, creating Bharti Wal-Mart Private Limited. The venture was to provide wholesale cash-andcarry and supply-chain management, according to Wal-Mart’s website.

Despite recent approval by India’s national government to open the retail market to foreign companies, many states within India have opted to impose their own ownership restrictions.

A Bharti Wal-Mart spokesman was quoted in The Economic Times in January as saying: “There have been some temporary delays in stores as the company developed and implemented enhanced procedures for obtaining licenses.”

Kevin Gardner, a spokesman at Wal-Mart headquarters in Bentonville, said last week in an e-mail: “The statement from our Bharti Wal-Mart spokesperson is indeed our position and is the extent of what we’re saying on this topic.”

Raja Kali said there has been fear among small retailers that the entry of large-scale retailers from other nations will drive them out of business. Kali is a native of India and associate professor and Conoco Phillips chairman in international economics and business at the Sam M. Walton College of Business at the University of Arkansas at Fayetteville.

“There are already largescale Indian operations,” he said. Those operations, he said, have the technological capability to streamline operations throughout the supply chain, enabling them to sell merchandise at a lower price.

“This might make the landscape difficult for small-scale retailers,” he said.

Most people, Kali said, believe that greater efficiency is a good thing and that consumers benefit from developments such as large-scale farming operations. But in India, he said, resistance on the part ofsmall-scale retailers is strong, and political parties are capitalizing on their fears.

The Indian government has allowed outside retailers to set up shop in the past, he said, but those were primarily limited to single brands, such as a Levis or Tommy Hilfiger outlet.

The Wal-Mart-Bharti partnership needed the central government to relax the rules for Wal-Mart to be involved in the supply-chain side of the business. That approval did occur, Kali said, but many state governments chose not to comply.

“They kind of left the reform unfinished by saying state governments could leave the restrictions in place,” he said.

India - a nation in which small-scale shops and street vendors are common - already has large-scale retailers. They include Big Bazaar, a multilevel, supercenter format that carries a wide range of general merchandise as well as food, and Reliance Industries Ltd., whose businesses range from retail to energy production.

“Wherever these stores are opening, they are attracting lots of customers,” Kali said. If Wal-Mart and other big retailers not based in India were allowed direct access to the market, he said, “I think there’s little doubt they would be effective.”

Camille Schuster, president of consulting firm Global Collaborations Inc. and marketing professor at California State University at San Marcos, called India “a very tough market.”

“Whatever amount of bureaucracy we have in the U.S., it’s 10 times that amount in India,” she said.

Even while the British were in control there, she said, there was a British way of doing business and an Indian way of doing business. Today, she said, much of the market power resides with a relatively small number of families.

“You have to contend with a huge amount of bureaucracy, but there’s a back-door approach, filled with bribery,” she said.”The process of getting anything done is chaotic and long.”

At one point, Schuster said, India’s government shut down the operations of all foreignbased retailers. Still, she said, the nation is appealing to outside retailers because of its growing middle class, a population of 1.2 billion and, increasingly, higher wage earners such as engineers and technicians.

As for the latest probe of Wal-Mart’s activities, she said, the company and its U.S.-based competitors are subject to the federal Foreign Corrupt Practices Act. The act, which became law in 1977, makes it unlawful for certain people and entities to make payments to foreign government officials to obtain or retain business. It is enforced by the U.S.

Department of Justice.

“You’re supposed to know what somebody else is during on your behalf,” Schuster said.

The act was amended in 1998 to apply to foreign firms and people attempting to make corrupt payments within U.S. territory.

Business, Pages 61 on 03/24/2013