British supermarket giant eyes India expansion
London, England, United Kingdom (AHN) – Britain’s largest supermarket Tesco is the likely beneficiary of a planned lifting of restriction on foreign investments by the Indian government.
Indian Corporate Affairs Minister Jyotiraditya Scindia on Thursday supported the lifting of a restriction on foreign investments for certain sectors, such as retail. He suggested the end of the ban following a 35 percent drop in foreign direct investment in 2010.
The minister’s statement was made a week after British Business Secretary Vince Cable visited India and lobbied Indian Commerce Minister Anand Sharma to ease rules on foreign direct investments in several sectors such as higher education, defense, financial services and retail.
The push is timely because Tesco is eyeing expansion into India. The British grocer has formed an alliance with Tata Group, one of India’s largest conglomerates, to help open a new hypermarket chain, warehousing and supply system.
New Delhi is open to foreign investments to establish new cold chain logistics systems and warehousing facilities to prevent the loss of up to 40 percent of its food produce that ends up rotten before it reaches the market. Over 17 million tons of food grain worth $3 billion (GBP 2 billion) were spoiled in 2010 due to lack of storage facilities.
Outgoing Tesco Chief Executive Sir Terry Leahy, who is attending the World Economic Forum in Davos, said he favored the creation of new supply chains that are sustainable to address needed changes in models of mass consumption, particularly for large consumer markets such as India and China.
Leahy disclosed that after he retires from Tesco, he will be involved in private investment in the U.K. and Asia, which he conceded is a vital market for the British retailer.
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