Tesco ties up with Tatas to roll out retail chain in India

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Dec 18, 2013 07:46 IST

Britain’s Tesco Plc is set to become the first foreign retail chain to set up a supermarket in India under the liberalised foreign direct investment (FDI) policy. It has set up a partnership with the Tata Group’s Trent Hypermarket Ltd (THL), with an initial investment of $110 million (about Rs. 675 crore).

Tesco and THL have applied to the Foreign Investment Promotion Board (FIPB) — the nodal agency to vet overseas investment proposals — for setting up a 50:50 joint venture for super-markets in India. The venture plans to set up the first of these stores in Maharashtra and neighbouring Karnataka.

Tesco’s decision is likely to bring cheer to the government battling to attract investment amid perceptions of policy paralysis and help the economy climb out of slowdown in an election year.

The move comes more than a year after the government, in a politically-sensitive move, eased norms to allow foreign direct investment (FDI) up to 51% in mutli-brand retail.

HT was the first to report on Tuesday that India is set to receive the first FDI proposal in multi-brand retail before the end of this year.

The proposed venture between Tesco and THL will sell products including food products, wine and liquor, textiles and garments, footwear, crockery, furniture, electronic equipments, jewellery and books and magazines.

“The application is a positive step forward in the relationship between the Tata Group and Tesco. We believe that our understanding of the Indian market coupled with Tesco’s unparalleled global retail expertise will allow us to leverage the tremendous potential of the market to the benefit of all stakeholders,” said Noel Tata, vice-chairman, Trent.

Tesco has a franchise deal to provide support to Trent’s Star Bazaar that currently operates 16 stores across the southern and western regions of India.

“We welcome Tesco’s decision to invest in India,” said Anand Sharma, commerce minister.

“We welcome this development and on our part assure them all support for expedited clearances. I am sure that the other global leaders will also look at investing in India,” Sharma said.

Recently, the world’s largest retailer, Walmart Stores Inc, had pulled out of its six-year-old joint venture with Sunil Mittal-led Bharti Enterprises, seemingly on grounds of restrictive rules.

The principal opposition party the BJP, the Left parties and Mamata Banerjee-led Trinamool Congress are opposed to allowing any foreign investment in the retail sector arguing that it would put the livelihood of neighbourhood grocery stores and street vendors at risk.

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