AMRITSAR, India -- Wal-Mart Stores Inc. on Saturday rolls out its deep-discount retailing formula in India, targeted at a more than $350 billion a year retail industry made up almost entirely of small merchants such as Ranjit Singh.

Mr. Singh, 18 years old, sells cookies, chewing tobacco and soft drinks from a wooden cart across the street from the construction site of Wal-Mart's first Indian store. Under Indian rules governing foreign retailers, Wal-Mart and its joint venture partner, Bharti Enterprises Ltd., can't sell directly to consumers but instead will operate a cash-and-carry business selling 10,000 products to licensed store owners, ...