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FIPB date set for Tesco

New Delhi, Dec. 23: The Foreign Investment Promotion Board will take up UK-based Tesco Plc’s proposal to open retail stores on December 30.

Tesco proposes to pick up a 50 per cent stake in Trent Hypermarket Ltd, a wholly owned subsidiary of Trent Ltd, a Tata group company.

A green signal to Tesco will give a fillip to other foreign multi-brand retailers to enter the country.

Tesco plans to open three to five stores every financial year and will sell 14 categories of products, according to its application, the sources said.

It will sell tea, coffee, vegetables, fruits, meat, fish, dairy products, wine, liquor, textiles, footwear, furniture, electronics and jewellery.

Tesco’s application is the first in multi-brand retail since the government allowed 51 per cent foreign direct investment in September last year.

It comes two months after Wal-Mart Stores and Bharti Enterprises said they would go their separate ways in retail.

Tesco proposes to operate stores under various banners, including Star Bazaar, Star Daily and Star Market, with the tag line reading, “A Tata and Tesco Enterprise”.

Sources said French retailer Carrefour was likely to follow the steps of Tesco. However, they would be keenly watching the clearances being given by the FIPB to Tesco before filing its application. The French retailer is likely to apply next month.

Sources said the retailer was in talks with domestic players, including Kishore Biyani’s Future group.

Carrefour is the second-largest retailer in the world with revenues worth $80 billion. In Asia, it is present only in China and Taiwan.

“We do hope that the other majors in this sector will also come, looking at the potential of the Indian market. The fact that they are coming to a country of 1.25 billion and a country which is the largest producer of foodgrains, fruits and vegetables,” commerce minister Anand Sharma has said.

According to the current norms, a foreign retailer wanting to invest in the multi-brand retail sector has to mandatorily source 30 per cent of the value of procurement or products from small and medium-scale enterprises.

In back-end infrastructure, the government has relaxed the norm by stating that foreign partners must spend “50 per cent of the first $100 million” brought in by them in back-end infrastructure and not their total investment.

The government has vested the powers with the state to allow global retailers to open shop in any city, diluting the earlier norm of restricting it to only 53 cities which had 10-lakh population.

With increasing disposable income, expansion of stores and supporting economic factors, the retail sector is expected to grow at 7 per cent over the next 10 years, reaching a size of $850 billion by 2020.

 
 
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