UK multinational grocery and general merchandise retailer Tesco is on course to make a decision regarding the size of a potential multi-billion dollar investment in India as UK Prime Minister David Cameron’s trip to the country commences.
Cameron’s visit to India as part of a UK trade mission has gained attention for its implications on the size of the retailer’s investment.
UK dailyThe Telegraph reports that Cameron has promised Tesco CEO Philip Clarke, whom he has spoken with in recent days, that he would pursue the opening up of foreign direct investment (FDI) pathways for UK retailers.
Should Cameron receive appropriate assurances, Tesco’s board could make a decision regarding the scope of its Indian investment programme as soon as this summer.
These developments follow the defeat of a bill to ban FDI in the Indian retail sector in the upper and lower houses of Parliament in December last year, a result that opened the way for international retail chains to own a majority share in multi-brand retail chains.
Despite this result in parliament, Tesco’s senior management remain concerned about the costs and impositions the Indian government might place on the retailer if it decides to go alone with an investment.
There is a strong preference to operate under Tesco’s own moniker, if rules regarding the proportion of local goods sourced and costs concerning local infrastructure close to new shops could be relaxed.
Clarke is reported to have met with the Indian commerce and industry minister Anand Sharma, during his visit to London just over a week ago, as part of this pursuit of assurances.
Sharma is believed to have emphasised the autonomy of individual states in determining how rules should be applied.
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