UK-based grocery chain Tesco is not in a hurry to enter India. Media reports suggest, quoting a senior Tesco official, that the retail chain is not looking at entering India unless foreign direct investment is allowed in the front end retail chains.
“We do expect to be there (India) but subject to changes in the laws. It takes years of patient work. We think this is not just a flash in the pan, we are talking two to five years,” Tesco finance and strategy director Andrew Higginson has reportedly told a consumer and retail summit in London.
Tesco was in talks with Bharti Group sometime last year for an India entry, however it lost out to US retail chain Wal-Mart in striking the JV. Subsequently, the company was reportedly in talks with other Indian business groups like Hero Honda’s Munjals and the Tatas. It looks like Tesco is not interested in picking up stake in a cash and carry business the way Wal-Mart has done with Bharti.
Like Tesco, French retail chain Carrefour is also going slow on their India entry. One reason may be that the current UPA government in India is not forthcoming on the retail FDI policy. Even though the commerce and industry minister Kamal Nath is in favour of opening up the sector, UPA chairperson Sonia Gandhi is worried about the impact of such a policy on the kirana stores (and how that will impact the future of the Congress party in electoral politics).
Currently a 51 per cent foreign investment is allowed in single-brand retail, while foreign multiple-brand retailers in India are limited to cash-and-carry and franchise or licence operations.