Tesco Applies to Indian Government for Developing a Multi-Brand Retail Business in India

Tesco Plc., the world’s third-largest retailer, has applied to the Indian Government for developing a multi-brand retail business in India.

The company has filed its application with the Department of Industrial Policy and Promotion (DIPP) for acquiring a 50 percent stake in Tata Group’s Trent for US$ 110 million.

This is the first application received by the Indian Government since it opened the country's multi-brand retail sector for up to 51 percent foreign direct investment (FDI) in September 2012.

Trent currently operates hypermarket chain Star Bazaar, mainly in Karnataka, Maharashtra and Gujarat.

If its application is approved, Tesco plans to open around four stores every year and will sell 14 categories of products, including textiles.

Tesco had signed wholesale and franchise agreements with the Tata Group in 2008, and Tesco currently supplies around 80 percent of the goods in Tata’s 16 Star Bazaar and Star Daily stores in Southern and Western India, Trevor Masters, Tesco’s CEO Asia said on the company’s blog.

“With a population of 1.2 billion people and an enormous range of economic and social classes, languages, religions, cultures and geographies, India is one of the most diverse markets in the world. This presents its own challenges but it’s also what makes India such an exciting opportunity,” Mr. Masters said.

If the application for 50 percent stake in Trent were successful, it could open the way to Tesco investing directly and forming a partnership with the Tata Group. “That partnership would mean working closely every day to bring more of the benefits and capabilities we have developed over decades to Indian consumers, manufacturers and the supply chain,” Mr. Masters said.

The combination of Tesco’s global retail expertise and Tata’s understanding of the Indian market provides a great scope, he added.

The DIPP will first scrutinize Tesco’s application and then forward it to the Foreign Investment Promotion Board (FIPB) for approval.