Tesco is set for a big push into India as politicians in Delhi cleared the way for foreign firms to break into the retail market.
The controversial decision to remove a ban preventing international firms like Tesco, Wal-Mart, and Carrefour from setting up shop in India has now received full parliamentary backing.India is a crucial market for Britain’s biggest retailer, which was dealt a blow earlier this week when it effectively called time on attempts to crack America with its fledgling supermarket chain Fresh & Easy.The Delhi government has made it hard for foreign supermarket chains to break into the domestic scene because it wants to protect the local network of corner shops, known as kirana stores.
It has faced fierce protests and had announced plans to relax these rules in January only to stage a u-turn days later.India’s upper house waved through a relaxation of laws on Friday as part of a plan to boost the country’s slowing economy.It was the last hurdle after the Congress-led government won a key vote in the lower house with a total of 123 MPs voting in favour of the decision.
A Tesco spokesman said: ‘Tesco welcomes this positive development and we are reviewing the conditions. We already have a successful franchise arrangement with Tata’s Star Bazaar stores and we are hopeful that this development will allow more Indian consumers, businesses and communities to benefit from retail investment.’Tesco already has stores in 13 countries – with Poland, Korea and Thailand its star performers.In an effort to learn more about Indian consumers ahead of entry laws being relaxed, the big chains have joined forces with local players.
Tesco teamed up with Tata and has started to roll out a series of Tesco-style hypermarkets, branded Star Bazaar, under a franchise arrangement.Yesterday’s development will mean Tesco can take control, owning more than 50 per cent of the business, and also put its name above the door.Tesco has been struggling to turn its business around in the UK, following a shock warning on profit levels in January. It needs success from abroad to offset the challenges at home.
Its international business now accounts for a third of group sales. Tesco has seconded veteran David Morris from its Hungarian business to become chief operating officer.He has almost doubled the number of stores to 13 in the past two years.‘We supply 80pc of the stock into Star Bazaar and have opened a state-of-the-art distribution centre in Mumbai,’ Morris told the Mail earlier in the year.‘We are focused on the west and south of the country, which has 150m potential customers, where we are trying to understand each city.’ – Dailytimes