Tesco Up­beat on In­dia De­spite BJP’s FDI Stand

Bri­tish re­tailer to re­new fo­cus on In­dia even as rul­ing party stays op­posed to FDI in multi-brand re­tail for now

The Economic Times - - Business Of Brands - SA­GAR MALVIYA

Bri­tish re­tailer Tesco re­mains up­beat about its prospect in In­dia de­spite Bharatiya Janata Party, which will lead the next govern­ment in the coun­try, say­ing it will not al­low for­eign di­rect in­vest­ment (FDI) in multi-brand re­tail. “We firmly be­lieve that our part­ner­ships in both China and In­dia will al­low us to cap­i­talise on these enor­mously ex­cit­ing mar­kets in a way which is dis­ci­plined in our use of cap­i­tal and fo­cused on prof­itable growth,” Philip Clarke, chief ex­ec­u­tive of­fi­cer at Tesco, said in the com­pany’s 2014 an­nual re­port re­leased on Thurs­day.

The world’s sec­ond-largest re­tailer has out­lined In­dia, along with China and Turkey, among mar­kets it wanted to re­fo­cus for a more prof­itable ap­proach to growth.

“Many of our choices this year — to en­ter part­ner­ships in China and In­dia or to in­vest mod­estly in an in­ter­net startup in South East Asia — re­flect this phi­los­o­phy of es­tab­lish­ing a po­si­tion of op­por­tu­nity and test­ing re­turns against our cri­te­ria as a ba­sis for build­ing long-term, value-en­hanc­ing po­si­tions,” Tesco chair­man Richard Broad­bent is quoted as say­ing in the an­nual re­port.

In March this year, Tesco en­tered into an agree­ment with Tata Group’s Trent to form a 50:50 joint ven­ture with Trent Hyper­mar­ket, to be­come the first (and so far only) for­eign su­per­mar­ket chain to have ap­plied for and re­ceived a nod to set up re­tail shop in the coun­try af­ter In­dia al­lowed for­eign play­ers to own up to 51% stake in lo­cal ven­tures in 2012, but with a lot of re­stric­tions.

The BJP, in its elec­tion man­i­festo, had said it will not al­low FDI in multi-brand re­tail, mak­ing the fu­ture of the Tesco-Trent re­tail ven- ture un­cer­tain. Some in­dus­try ex­perts be­lieve the prime min­is­ter-elect, Naren­dra Modi, will rather tweak some rules in re­tail FDI pol­icy than dis­al­low­ing it al­to­gether. “Modi will surely not do any­thing which is detri­men­tal for re­tail sec­tor and its po­ten­tial of job cre­ation. At the same time, he is con­cerned about FDI's pos­si­ble im­pact on small en­ter­prises and traders. So, Modi will have to find a mid­dle path by tweak­ing some rules in FDI pol­icy in a way that won't an­tag­o­nise ei­ther for­eign in­vestors or small scale busi­ness oper­a­tors,” said Ruchi Sally, di­rec­tor at bou­tique re­tail con­sul­tancy Elargir So­lu­tions. Tesco-Trent com­bine, which has an­nounced in­vest­ments of £85 mil­lion in re­tail, plans to add at least five stores in mar­kets such as Ma­ha­rash­tra and Kar­nataka each year. Tesco had a tie-up with Trent since 2008 to pro­vide back­end sup­port and re­tail ex­per­tise to the firm’s Star Bazaar hy­per­mar­kets.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.