Investors and prospective investors in Wal-Mart (NYSE: WMT) shouldn't be blamed if they don't pay much attention to what's happening in the world of Indian politics. After all, the country is half a world away, and Wal-Mart currently has just two stores in the country. Yet the reason Wal-Mart has not made more significant in-roads into India is because current Indian government policy prohibits foreign companies from operating independent retail stores -- a policy that aims to protect small-scale Indian business owners.

Recent rumors out of New Delhi, however, have the government there considering changing that policy due to food inflation of more than 16% this year. It's been exacerbating India's poverty problems and undermining popular satisfaction with the government. The hypothesis is that by allowing efficient, price-focused retailers such as Wal-Mart to enter the market, those retailers can help force prices down and still provide employment for Indians.

This could be big
India, for those who haven't heard of it, is not a market opportunity that should be shrugged off. With a population of more than 1.1 billion and a rickety (to be generous) retail infrastructure, it's the type of market that could help spur Wal-Mart's growth for the next 10 to 20 years. Assuming India could comfortably support one store per 400,000 people (about the ratio Wal-Mart has in Brazil today), that suggests store potential of at least 3,000. To put that number into context, Wal-Mart has a little less than 3,800 stores in the United States today -- a growing empire that's taken almost 50 years to build (Wal-Mart opened its first store in 1962).

In other words, with market opportunities such as India still untapped, it doesn't make sense to confine Wal-Mart to a 10-year discounted cash flow valuation as most retail analysts tend to do. There are much larger opportunities out there and the growth of the emerging markets consumer is a very lucrative megatrend that will take decades to play out.

Don't get amped just yet
Of course, the Indian government is notorious for its inaction, and it could be years before foreign retailers such as Wal-Mart are allowed to own and operate their own stores in the country. Further, there will be competition from both domestic Indian competitors and from other multinational retailers such as Tesco and Carrefour. What's worth noting, however, is that this policy revision is on the Indian government's agenda and that further food inflation, which looks unavoidable given India's growing demands and inadequate agricultural and transportation infrastructure, could spur action sooner rather than later.

Based on my estimates, this looming opportunity in India is not at all priced into Wal-Mart's stock today, and that company's international exposure is one reason why I prefer Wal-Mart to primarily U.S. competitors such as Target (NYSE: TGT) and Costco (Nasdaq: COST).

Tim Hanson is advisor of Motley Fool Global Gains. Costco Wholesale and Wal-Mart Stores are Motley Fool Inside Value selections. Costco Wholesale is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Costco Wholesale and Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.