Gurgaon: Foreign retailers such as UK-based Tesco Plc. and Germany’s Metro AG have raised concerns surrounding issues such as supply chain management, lack of skilled workers and policy barriers in the Indian market, despite the government’s decision in September to allow foreign direct investment (FDI) in multi-brand retail.
“We need to cut out the waste in the food supply chain to feed more people,” said Dame Lucy Neville-Rolfe, executive director for corporate and legal affairs and member of the board at Tesco. Conditions for entry into the Indian market “are tougher compared to other markets”, she said at the World Economic Forum.
Tesco currently has a franchise agreement with Tata group’s Trent unit, under which the latter’s hyper-market chain uses Tesco’s supply chains and infrastructure. Tesco currently sources $500 million of goods including apparel, footwear and handbags from India for sale in other markets.
“We are still evaluating the Indian market, we clearly need to study the conditions,” Neville-Rolfe said. “We very much understand where the government is coming from, in wanting to ensure that these changes encourage growth in the supply chain and other factors”.
The Indian government should lower the barriers for entry of foreign investors, said Tino Zeiske, vice president of international affairs (Asia Pacific) at Metro.
“This will help ease foreign investments and help overcome bureaucratic burden,” said Zeiski. who counted a lack of sufficient “skilled labour and awareness amongst consumers” as other shortcoming.
Food safety and security remains a big concern for the company, he said.
Metro currently operates 12 cash and carry outlets in India.
In September, the Indian government allowed 51% FDI in multi-brand retail in India.