Foreign Retailers Step into India

Foreign Retailers Step into India

Tesco’s plans for expansion into India have been approved by the country’s government. The British retail giant intends to invest $110m  in India’s recently liberalized retail sector.  It will set up a chain of supermarkets in partnership with an Indian company. Tesco is the first global food retailer to get approval to invest in India since the government decided to open up the supermarket sector last year.

The deal itself sees Tesco take a 50% stake in India’s Trent Hypermarket. The company already supplies much of the produce in the Star Bazaar shops.

Other players

Others, such as Swedena’s Hennes & Mauritz , have also been given final approval by India’s government to open stores there. The retailer announced last month it planned to invest $115.5 million and open 50 stores across the country.  Marks & Spencer has also been keen to seize the potential of India’s retail market. It already has a presence in India, and it plans to double its store count to 80 – making the country its biggest overseas market.

Recent liberalization

India’s rules governing foreign direct investment (FDI) in the retail sector were eased in August 2013. Previously, it was compulsory for foreign supermarkets to source 30% of their products from small Indian firms. The government now allows foreign firms five years in which to reach that target, giving them the option of importing goods from overseas initially. Foreign retailers will also be allowed to set up shop in cities with a population of fewer than one million – they had previously been banned.

What this means

2014 is a good time for retailers of any kind to take a close look at India’s consumer market.


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