Tesco to open wholesaling chain in India
Supermarket giant Tesco yesterday said it was pushing into India by launching a wholesale cash-and-carry business.
At the same time it announced a deal with Indian titan Tata to help it expand its fledgling hypermarket business.
Tesco will invest £60m in its wholesale business – which will supply Tata’s chain of food stores, as well as small retailers and restaurants – over the next two years.
Under Indian trade law, foreign retailers are only allowed to enter the Indian market as wholesalers. But the move will give Tesco traction in its intention to become a consumer retailer if the trade rules change.
Tesco said it planned to open its first cash-and-carry outlet in Mumbai towards the end of next year, with further hubs in Delhi and Bangalore.
In a separate agreement, Tesco will be paid an undisclosed sum to provide Tata’s retail unit Trent with advice on how to grow its hypermarket chain Star Bazarr.
Tata intends to expand the four strong chain by building an extra 46 stores, allowing it to tap into the spending power of the burgeoning Indian middle class.
The deal follows an agreement between Wal-Mart and Indian telecoms giant Bharti to explore business opportunities. There are good prospects for large scale retailers in India, where small, local stores still account for 95 per cent of food sales.