Tesco, Trent JV to bring in first multi-brand retail FDI
More than a year after allowing FDI in multi-brand retail segment, the government today received the first application from Tesco Plc in the sector. The UK-based retailer sought approval to open retail stores in India with an investment of $110 million in joint venture with the Tata Group.
Tesco has proposed an equal joint venture with its existing partner, Trent, a Tata group company, to open stores, initially in Maharashtra and Karnataka.
Commenting on the development, commerce and industry ministry Anand Sharma said, "We welcome the decision of Tesco to invest in India. 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 other global leaders will also look at investing in India."
The UK-based retailer will trade in products under 14 categories, including cereals, tea, coffee, spices, flour, vegetables and fruits, meat, fish and poultry, sweetmeat, bakery and dairy products, soft drinks, ice-creams, wine and liquor, textiles, footwear, crockery, furniture and electronic equipment among others and plans to open three to five stores every financial year.
In September last year, the government had allowed 51 per cent FDI in the sector with certain riders like mandatory sourcing from Indian SMEs and investment in back-end infrastructure. Due to the conditionalities, global retailers, including US-based Walmart and Tesco had refrained from sending formal proposals to the government.
Following its meetings with both domestic and international retailers, the government in August 2013 eased the norms to make the segment lucrative for retailers.
Trent Ltd vice-chairman Noel Tata said, "We believe that our understanding of the Indian market, coupled with Tesco's unparallelled global retail expertise will allow us to leverage the tremendous potential of the market to the benefit of all stakeholders."