Tesco is to venture into India with the development of a wholesale cash-and-carry business, backed by an initial investment of up to £60 million in the first two years.

The new wholesale outlets, which will be designed for the Indian market following local research, will offer a comprehensive range of fresh food, grocery and non-food products to small retailers, restaurants, kirana stores and other business owners.

The business, based initially in Mumbai, will also provide farmers and other suppliers with a highly efficient route to market.

Tesco is to enter into an exclusive franchise agreement with Trent, the retail arm of the Tata Group, which will see it draw on the advice and technical capability of the UK number-one retailer for the development of its hypermarket business, Star Bazaar.

Trent has four hypermarkets and plans to expand to 50 stores over the next five years.

Tesco’s wholesale business will supply merchandise to Star Bazaar, enabling the two companies to benefit from the rapid development of a modern supply chain.

Tesco already sources over £170 million worth of Indian products each year, with sourcing offices in Delhi, Bangalore and Tirupur. The retailer also employs nearly 3,000 Indian staff at its Hindustan Service centre in Bangalore, providing IT, financial and business services to the entire Tesco Group.

Tesco chief executive Sir Terry Leahy described the move as “another exciting development” for the retailer. He said: “It complements our entries into China and the US, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses.

“We are delighted to be working with Tata, one of India’s largest and most respected business groups. Our agreement will enable us to share our international retail expertise, supporting Trent in the development of their Star Bazaar hypermarket business and benefiting Indian consumers.”

Noel N Tata, managing director of Trent Ltd, added that the firm was “extremely excited” about its about our association with Tesco. He said: Our ability to access Tesco’s retail knowledge and expertise will play an important role in our endeavour to offer a unique shopping experience to customers across the country. Their wholesale cash-and-carry business will provide us with the opportunity to tap into a world class supply chain thereby delivering the best of products and services to our customers.”

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