Tesco has signed a deal to enter into India’s retail sector, becoming the first foreign supermarket to join the £330bn market.
The superstore, which is the biggest in the UK will enter into a 50-50 deal with Trent Hypermarket Limited and invest a reported £85 million to open 12 supermarkets in the Southern and Western regions of India.
It has been 18 months since the Indian government has freed the sector to be accessed by international supermarket chains. International firms can now enter into deals and buy up to 51% stakes of multi-brand retailers in the country, a decision which has been met by a lot of opposition.
This is likely due to the previous relaxing of certain rules which could threaten the jobs of Indian residents. Prior to August last year, foreign supermarkets in the country had to source at least 30% of its produce locally, but that rule has now been relaxed due to fears that it was putting off investors.
Supermarkets can now have five years grace before hitting that 30% and import from over seas, but some argue it is a slippery slope and local farmers will soon fall victim of the superstores outsourcing their produce.
