New Delhi: Britain’s Tesco has struck a joint venture deal with India’s Tata Group to become the first foreign supermarket to enter the country’s $500-billion retail sector.
The world’s third-biggest retailer made the announcement after winning clearance from the Indian Foreign Investment Promotion Board for a $140-million investment in the alliance with Tata Group unit Trent Ltd.
On completion of the deal, THL will operate 12 stores selling goods from food and groceries to home and kitchen products and fashion and accessories. Tesco already supplies goods to Tata’s Star Bazaar and Star Daily stores in southern and western India after signing a wholesale agreement in 2008.
Foreign supermarkets can now hold stakes of up to 51% in multi-brand retailers since the government opened up the sector.
Until the law was relaxed, foreign multi-brand retailers had been unable to sell directly to consumers in India. US giant Walmart and France’s Carrefour were among the first retailers to voice interest in setting up shop in India.
But the supermarkets have sought more clarity on the rules, which say foreign firms must earmark 50% of their investment to setting up back-end infrastructure such as warehouses. They must also source at least 30% of the value of the goods they sell from small-scale local firms.
Walmart last October announced it was ending its retail partnership with Indian firm Bharti, with which it had operated as a wholesaler in the country since 2007.