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Tesco decries frenzy to enter India, will await change in law

Tesco decries frenzy to enter India, will await change in law
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First Published: Sat, Jun 23 2007. 02 33 AM IST
Updated: Sat, Jun 23 2007. 02 33 AM IST
London: Britain’s Tesco has criticized the “frenzy” being whipped up among foreign retailers about entering India and said it will only launch there subject to a change to laws that prohibit non-Indian ownership.
“People are saying, ‘there’s a land grab’, ‘there’s a land grab’. There’s never been a land grab,” finance and strategy director, Andrew Higginson, said at the Reuters Consumer and Retail Summit in London.
“It’s baloney. It is driving a kind of frenzy. And it is illegal for us even to go into India.”
Tesco’s joint venture talks with Indian conglomerate Bharti collapsed in December. The deal would have given it an early foothold in a $300 billion (Rs12 trillion) retail industry forecast to more than double in size by 2015.
Foreign multiple-brand retailers in India are limited to cash-and-carry and franchise or licence operations.
Bharti went on to strike a deal with US Wal-Mart Stores Inc.
Tesco’s comments add to signs some of the early fervour European retailers showed about conquering the fast-growing subcontinent and offset slowing consumption at home is ebbing in the face of legal and operational obstacles.
Carrefour, the world’s second-largest retailer, has cooled its plans to enter India until regulation is clarified, switching its focus to Russia in the short term.
Kishore Biyani, chief executive of Pantaloon Retail, one of India’s fastest-growing shopping groups, in March told Reuters that estimates that organized retail could grow to a third of the market from 3% now were overly ambitious.
It was likely to grow to nearer 15%, he believed.
Yet AT Kearney in a report published on Thursday said the window of opportunity was closing for retailers to enter China, Russia and India.
Vice-president, Hana Ben-Shabat, said that foreign retailers in India faced a particular challenge of understanding the market fast enough to compete with nascent Indian players and snap up prime real estate.
Tesco parted with Bharti because the owner of India’s largest mobile phone group wanted to move faster to compete with homegrown groups, Reliance Industries and Aditya Birla. The two groups together aim to invest more than $4 billion rolling out hundreds of hypermarkets and supermarkets.
Higginson said there were “lots of people” who wanted to work with Tesco in India but it was in no rush because the supply chain still needed to be built from scratch.
“It takes years of patient work. We think this is not just a flash in the pan, we are talking two to five years. We do expect to be there but subject to changes in the laws.”
For Tesco, there was a greater chance of success in the US where it could possibly open hundreds of stores in Las Vegas, Phoenix, San Diego and Los Angeles in November.
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First Published: Sat, Jun 23 2007. 02 33 AM IST
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