More than a year after India opened up multi-brand retail trade to foreign direct investment, British retailer Tesco Plc became the first global retailer to seek the Government’s nod to enter the segment.
Tesco plans to pick up a 50 per cent stake in Trent Hypermarket Ltd, a retail arm of the Tata group, and enter the multi-brand retailing arena.
The British retailer plans to invest $100 million (around Rs 620 crore) to set up retail stores in the country.
The stores will operate under the names Star Bazaar, Star Daily or Star Market, and the first few will come up in Maharashtra and Karnataka.
Tesco already operates in India through a joint venture in the wholesale space with the Tatas. These stores are located in Mumbai, Bangalore, Ahmedabad and Chennai.
Trent Hypermarket currently has 16 stores in the South and West.
After meeting Tesco officials here on Tuesday, Commerce and Industry Minister Anand Sharma said: “On our part, we 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.”
In September 2012, the Government eased barriers and allowed 51 per cent FDI in front-end retail.
In May, Tesco CEO Philip Clarke and Trent Vice-Chairman Noel Tata met Sharma to seek clarifications on the policy.
More involved Speaking to Business Line , a Tesco spokesperson said: “We have been working with the Tata Group in India for over five years, supporting the development of their Star Bazaar and Star Daily multi-brand retail stores via the provision of wholesale and franchise agreements.
“We have always said we’d like to get more involved in this exciting market and are submitting an application to the Government of India which, if successful, would allow us to enter into a joint venture with Trent Hypermarket Ltd.”
The Department of Industrial Policy and Promotion, part of the Ministry of Commerce & Industry, will scrutinise the application and forward it to the Foreign Investment Promotion Board for approval.
Positive step Quoting Vice-Chairman Noel Tata, a Trent press release said: “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.”
On Tuesday, Trent’s shares closed at Rs 1,066.55, up 7 per cent, on the BSE.