India is all set to experience foreign multi-brand retail, as TESCO has filed its application to open its chain in India. Partnering with TATA’s Trent retail operations, TESCO has promised that it will invest $110 million into this joint venture. Yesterday, TESCO submitted its application to Foreign Investment Promotion Board which oversees FDI in various sectors.
It plans to buy 50% stake in TATA promoted Trent retail and fulfill the necessary Government requirements of FDI in this sector. Last year, India opened up Foreign Direct Investment (FDI) in multi brand retail in India, and if everything goes smooth, TESCO will be the first such multi-brand from foreign location to open its chain inside India.
Commerce and Industry Minister Anand Sharma told reporters,”We welcome the decision of Tesco to invest in India. On our part, we 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 the other global leaders will also look at investing in India,”
As per the application, TESCO plans to open 3 to 5 stores every year, focusing on 14 broad categories: Tea & Coffee, Vegetables, Fruits, Meat, Fish, Dairy products, Wine, Liquor, Textiles, Footwear, Furniture, Electronics, Jewellery and Books.
As of now, TESCO has planned to open its stores in Kolhapur in Maharashtra and Bengaluru in Karnataka. Market veterans are speculating that TESCO has planned its first stores in these two states as these are Congress rules states, and BJP is against FDI in multi-brand retail.
Moreover, assembly elections in Karnataka are scheduled in May 2018 and Maharashtra will vote in end of 2014. This gives ample time to TESCO to set up its base without any political storm.
TESCO was founded in the year 1919 and its headquarters are located in Cheshunt, Hertfordshire in UK. In terms of profits, it is world’s second largest retail chain after Walmart and in terms of revenues; it is world’s third largest retail after Walmart and Carrefour.
It has 6300+ stores and outlets in 14 countries across the world, and has captured 30% market share in UK. It employees a total of 537,000+ employees and this year it has achieved revenues worth £64.826 billion. TESCO has a total market capital of around £24 billion as of 2012 and is ranked 15th biggest company in London Stock Exchange.
It has presence in India since 2008 via joint venture with TATA and has stores in Bengaluru, Chennai, Ahmedabad and Mumbai.
It was speculated that Walmart will first apply to open its multi-brand stores in India, but it seems TESCO has beat Walmart in this regard. It would be interesting to see how multi-brand retail in India kicks off from here.