BBC NEWS | Business | Tesco planning venture in India (original) (raw)

Tesco will look to open its own stores in India if the law changes.

UK supermarket giant Tesco has announced plans to branch out into the Indian market.

Tesco plans to invest an initial �60m ($115m) to open a wholesale cash-and-carry business based in Mumbai.

The group has also signed a deal to help the retail arm of India's Tata group, Trent, develop its hypermarket business, for a fee.

Tesco said the "exciting" development would complement its existing businesses in China and the US.

Chief executive Sir Terry Leahy added the move would give the group "access to another of the most important economies in the world".

"Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses," he said.

Tesco's expansion into India follows similar moves by US-based rival Wal-Mart alongside India's Bharti Enterprises.

Legal limits

Large overseas retailers are currently barred by law at the retail level in India, and are limited to either wholesale, licence or franchise arrangements.

Should the legislation change, Tesco said it would look to open its own consumer retail business using the experience gained from its wholesale venture and deal with Tata.

Under the deal with Tata retail arm Trent, the Indian firm hopes to increase the number of Star Bazaar hypermarkets it runs from four to more than 50 in the next five years.

Tesco's new wholesale operation will also supply the Star Bazaar stores.

Tesco currently operates 3,729 stores employing more than 440,000 people in 13 countries across the globe, including Hungary, Slovakia , Malaysia and Thailand.