UK retailer Tesco set for India venture with Tatas

British retailer Tesco Plc is all set to enter India in a joint venture with Tata Group's Trent Hypermarkets Ltd, making it the first foreign supermarket chain to do so.

Tesco, the world's third-largest retailer, today said it had applied to acquire a 50 per cent stake in Tata group's Trent Hypermarket Ltd and is planning to invest around $110 million.

Tesco, which already has a franchise agreement to provide support to Trent's Star Bazaar chain, has sought approval from the Foreign Investment Promotion Board for the investment, official sources said.

Tesco, which earlier this month reported a drop in underlying sales in both Britain and its foreign markets, is looking at India's $500 billion retail sector to revive its fortunes.

Tesco's move is a morale booster for the government, which had failed to attract foreign investors in the multi-brand retail sector even after allowing up to 51 per cent ownership for supermarkets.

Tesco also is looking at expanding abroad, despite its decision to close loss-making businesses in Japan and the United States and a big investment drive to turnaround its underperforming stores in Britain.

"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," commerce minister Anand Sharma said.

While the proposed investment by Tesco is not large, the move will be seen as a vote of confidence at a time when global retailing giant Walmart opted out of its joint venture in India citing regulatory constraints.