FIPB clears Tesco's $110-mn investment in multi-brand retail JV with Tatas
30 December 2013
The Foreign Investment Promotion Board (FIPB) today approved British retailer Tesco Plc's proposal to invest 50 per cent in a joint venture with the Tata Group to enter the Indian multi-brand retail segment.
Tesco, the world's third-largest retailer, will make an initial investment of $110 million (about Rs680 crore) in joint venture with Tata Group company Trent Hypermarkets Ltd, to become the first multi-brand retail chain to enter India.
Tesco will pick up a 50-per cent stake in Trent Hypermarket Ltd, a wholly-owned subsidiary of Trent Ltd, a Tata group company.
Tesco is the first global retailer to apply for multi-brand retailing after the government allowed 51 per cent FDI in the segment in September last year.
Trent Hypermarket runs 16 outlets in the southern and western regions with support from Tesco.
Tesco, which earlier this month reported a drop in underlying sales in both Britain and its foreign markets, has lined up some 14 categories of products, including tea, coffee, vegetables, fruits, meat, fish, dairy products, wine, liquor, textiles, footwear, furniture, electronics and jewellery, for consumers in India's $500 billion retail sector to revive its fortunes.
The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, considered 12 items including Tesco's FDI proposal.
India allows FDI in most of the sectors through automatic route, the government approval is required in certain sectors sensitive for the economy.
While Tesco is desperately looking at expanding to markets like India to offset losses at home and in major overseas markets such as Japan and the United States, the retailer's move is a morale booster for the Indian government, which has failed to attract foreign investors to the multi-brand retail sector even after allowing up to 51-per cent ownership for supermarkets.