Tesco to become first foreign supermarket in India

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Britain’s Tesco said on Friday it had struck a joint venture deal with India’s Tata Group to become the first foreign supermarket to enter the country’s US$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 US$140-million investment in the alliance with Tata Group unit Trent Ltd.

Tesco said in a statement it had “entered into an agreement with Trent Limited, part of the Tata Group, to form a 50:50 Joint Venture in Trent Hypermarket Limited (THL) which operates the Star Bazaar retail business in India”. It said final clearances were still necessary.

If approved, the deal will make Tesco the first retail giant to debut in the massive Indian retail market since New Delhi removed foreign investment barriers in 2012.

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.

The Indian government moved two years ago to open up its potentially lucrative retail sector to foreign companies to try to boost a sharply slowing economy.

But until Tesco’s announcement, no companies had entered the market amid concern about tough conditions for entry.

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.

Until the law was relaxed, foreign multi-brand retailers had been unable to sell directly to consumers in India.

Trent said it believes its “understanding of the Indian market coupled with Tesco’s unparalleled global retail expertise will allow us to leverage the tremendous potential of the market”.

Foreign supermarkets can now hold stakes of up to 51 percent in multi-brand retailers since the government opened up the sector.

US giant Walmart and France’s Carrefour were among the first retailers to voice interest in setting up shop in India, the world’s second-most populous country and home to a fast-growing middle class.

But the supermarkets have sought more clarity on the rules, which say foreign firms must earmark 50 percent of their investment to setting up back-end infrastructure such as warehouses.

They must also source at least 30 percent 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.

Analysts say some foreign retailers are waiting until the results of the general election are known in May before deciding on investment, with the main opposition Bharatiya Janata Party expected to take power.

 

 

 

 

Source : Channel News Asia | March 22, 2014

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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