Tesco to arrive in India

New Delhi: In a major boost for the UPA government, the world’s third largest retailer Tesco on Tuesday applied to the government to enter the multi-brand retail sector in India. The UK-based retailer has proposed to pick up 50 per cent stake in Trent Hypermarket Ltd, a Tata group enterprise, to engage in the activities of multi-brand retail trading.

This is the first FDI application for multi-brand retail by an MNC, ever since the UPA government decided to allow foreign investment in the sector  last year amidst stiff opposition from political parties and traders .

Tesco has proposed an investment of $110 million, said a commerce ministry official.

The joint venture ‘Trent Hypermarket Limited’ will initially have operations in Maharashtra and Karnataka. It plans to open 3 to 5 more stores every financial year.

“We welcome this development and on our part assure them all support for expedited clearances. We hope that this will mark a new beginning in transforming India’s retail industry. I am sure that the other global leaders will also look at investing in India,” said commerce and industry minister Anand Sharma.

“Trent and Tesco have been in discussions rega-rding an investment by Tesco in Trent Hyper-market Ltd (THL) which operates the Star Bazaar business and is engaged in mult-brand retail trading. In this context, Tesco is making an application to the Foreign Investment Promotion Board,” said a statement by Trent.

It said that if the application is successful, “the intent would be to enter into a partnership where Trent and Tesco will each own a 50 per cent stake in THL.”

THL currently operates 16 stores across the southern and western regions of India. The proposed partnership will operate and build on the existing portfolio of Star Bazaar stores in Maharashtra and Karnataka, said the statement.

“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 Mr Noel Tata, vice-chairman, Trent.
The proposed joint venture will sell cereals, tea, coffee, spices, flour, vegetarian and non-vegetarian and other basic food and grocery products.