Tesco, Carrefour seek permission to set up sourcing centres in India

In a move that could signal entry of British retail major Tesco into India, the supermarket has decided to set up an Indian subsidiary to buy fresh and processed food from the country for its global stores.

Commerce and Industry Minister Anand Sharma today said that global supermarket giants Sainsbury, Carrefour and Tesco have applied for permission to set up sourcing centres in the country.

Tesco is making preparations to set up shop in the lucrative multi-brand retail segment in India, hinted Sharma today. He was addressing students of St Xavier’s Collegein Mumbaiat a CII-organised event. The applications were made during UK Prime Minister David Cameron’s visit to India.

[caption id=“attachment_633420” align=“alignleft” width=“380”]  Anand Sharma. Reuters[/caption]

This comes even as the government is probing allegations of lobbying by Walmart to facilitate its entry into India.

Earlier, it was reported that TESCO is in talks with Tata Group to set the ball rolling in India and is likely to make its debut from Bangalore and Mumbai this year.

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Tesco is a global grocery and general merchandise retailer headquartered in Cheshunt, UK. It is the third-largest retailer in the world measured in terms of revenues after Wal-Mart and Carrefour. The company has 5,380 stores 4,92,714 employees and a turnover of US $100 billion and over 60 million customers.

Tesco already has a presence in the in the cash-and-carry business in India. It first entered India in 2003, through an earlier partnership with Tata & Sons, but has felt restricted by the onerous laws which have, until recently, prevented wholesale investment, reported The Telegraph.

Although it is not known exactly how much the British retailer might invest in the country, any investment is likely to be sizeable if it is to gain a strong foothold.

Recently, Sharma met Tesco chairman Richard Broadbent at Davos and CEO Phillip Clarke in London and had asked them to submit their queries to the DIPP in writing.

India allowed foreigners to own up to 51 percent in its supermarkets, which sell multiple brands, opening the door to retailers such as Wal-Mart Stores. Previously, foreign companies could operate only wholesale businesses in the multibrand segment.

Such investments would be allowed on the condition that 30 percent of the inputs in case of multi-brand retail must be sourced from small and medium-sized local industries.

Sharma had earlier said that UK retailer buy around 7 percent of its international sourcing from India through its international sourcing offices in New Delhi and Bangalore and this is the first instance that it is opening a dedicated sourcing arm in India.

Earlier, addressing a round table of CEOs and investors in London, Sharma told Business Line India’s drive to build infrastructure too will be a growth driven. “The annual foreign direct investment into India grew by 10 fold from US $4.3 billion in 2004-04 to US $46.6 billion in 2011-12. Though we were slow in opening the FDI, we have received FDI in excess of $277 billion, bulk of which has come in the last 5 years,’’ he remarked.