Pehle aap: Carrefour could follow Tesco route into India

After the initial failure with the world’s largest retailer Walmart, India’s multi-brand FDI policy finally seems to be working as UK retailer Tesco has decided to seek the FIPB nod for a $110 million investment in its joint venture with Tata Group’s Trent Hypermarket.

And even though Tesco claims the decision to invest in Indiacame after months of arm-twistingand assurances from the government, its India entry will now be considered as a test case for FDI in the retail sector.

[caption id=“attachment_142430” align=“alignleft” width=“380”]  Reuters[/caption]

Depending on how the government responds to Tesco’s application, French Group Carrefour will move forward with its application to invest in multi-brand retail stores in India since the government’s policy riders such as the mandatory $100 million investment must only fund new ventures, is being seen as a hurdle by many global players.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

According to a report in the Business Standard, Carrefour is in talks with potential partners, including Kishore Biyani’s Future group and K Raheja Corp-owned Hypercity, for a possible alliance.

Earlier this year, Wal-Mart walked away from India and very few expected its rivals to step in before elections due by next May. But Tesco’s decision clearly marks a victory for the Congress party in securing its first foreign investment victory after announcing its intent on reforming the supermarket sector.

Tesco and Wal-Mart lobbied the government for years to allow global brands into the country. The door finally opened at the end of 2012 when the government, desperate to attract foreign investment as economic growth fell to its slowest pace in a decade, overrode stiff opposition from coalition allies and opposition parties.

Impact Shorts

More Shorts

Chennai Ranks #1 in Challan Checks: ACKO Insights for Smarter Car and Two Wheeler Insurance Decisions

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

But the government’s plans were dealt a heavy blow in October when Wal-Mart called off its Indian wholesale joint venture and postponed its entry plans, blaming unfriendly regulations and political uncertainty.

Company sources were quoted by Reuters as saying there had been numerous meetings with the government throughout the year, and talks intensified in recent weeks.

Tesco’s investment in India is widely expected to be cleared without much political opposition.

Yesterday, the Economic Times reported that thegovernment has put Tesco’s proposal on the fast track to send a strong signal that India is keen on attracting overseas investment.

The Foreign Investment Promotion Board (FIPB) is likely to take up Tesco proposal at its next meeting, which is expected to be held on 26 December.

With inputs from Reuters