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UK retail majors eyeing India

India's decision to liberalise its retail makes many British chains to sign JVs with firms here, reports Vijay Dutt.

india Updated: Jan 14, 2007 21:59 IST
Vijay Dutt

The possibility of India relaxing its existing curbs on foreign investments in the retail sector as early as February has perked up major British retail chains like Tesco and Argos.

Tesco and DSG International had been looking for such an opening for a long time. Argos, the giant catalogue retailer too, was just a few days ago reported to be close to signing a joint venture deal with the K Raheja Corporation -- to open stores in India.

Analysts believe that India could work very well for Argos. A joint venture would allow it to leverage local expertise while sharing its "unique retail style". Some items in Argos stores are priced even cheaper than at Tesco's.

Tesco already has interests in India. Last week it announced it would transfer 190 finance processing jobs from Cardiff to Bangalore over the next year and a half.     
 
Debenhams, a major High Street retail chain, and Marks & Spencer, which needs no introduction, are also looking for deeper and wider penetration into India. Analysts here have estimated that the Indian retail market, dominated by small chains and family-run stores, is worth around £170 billion (Rs 15 lakh crore).   
 
Tesco has been looking for partners after talks with Bharti broke down, after which the latter signed a deal with Wal-Mart. One retail analyst said, "It is more than a coincidence that news about the opening of India's retail sector has come just when Chancellor Gordon Brown and Trade Secretary Alistair Darling are going to India, along with 80 top British corporate chiefs and investors." 

At present, foreign retail investment is restricted by regulation to single-brand retailers. Even then such companies are allowed to own only up to 51 per cent.

In the last one year since the report that the President of Wal-Mart had gone to India to meet the Prime Minister for permission to open his chain there, commerce Minister Kamal Nathhas been bombarded with the same question about when he would lift restrictions, whenever he has been here. 

The retail chains here are now hoping that that the retail sector in India would open for 100 per cent FDI, albeit in a phased manner. It will generate over 25 million jobs directly and another 10 million in support in the next five years.