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December 10, 2012

INDIA: Tesco, Tata “in India expansion talks”

UK retail giant Tesco is understood to be looking at expanding further into India just days after announcing a review and potential exit from its troubled US venture.

UK retail giant Tesco is understood to be looking at expanding further into India just days after announcing a review and potential exit from its troubled US venture.

Tesco is reported to be focusing its attentions on India and an expansion into the cities of Mumbai and Bangalore as part of chief executive Philip Clarke’s growth plans, The Daily Telegraph reported. He is understood to have met with the chairman of the Tata family, Ratan Tata, to discuss plans for investment in the country, the publication noted on Saturday (8 December).

Tesco runs cash-and-carry outlets with its local partner Tata Group, the Indian conglomerate. The UK retailer also operates Tata’s Star Bazaar multi-brand stores for the Indian company on a franchise basis.

The report comes as the Indian government won a victory in its steps towards relaxing laws on foreign direct investment into the country’s retail sector. On Friday, India’s Upper House backed the plans to allow overseas investors to own up to 51% of multi-brand retail outlets, which could pave the way for the likes of Tesco, Wal-Mart Stores and Carrefour to expand further in India.

A spokesperson for Tesco in India did not comment directly on its plans to expand in India but told just-food today: “We have already welcomed moves in India to allow foreign investment in multi-brand retail and continue to review the conditions. We already have a successful franchise arrangement with Tata’s Star Bazaar stores and we are hopeful that this development will allow more Indian consumers, businesses and communities to benefit from world-class retail investment.”

A change in the law would mean Tesco may be able to open its self-branded shops, using Tata as its local partner.

The report came days after Clarke admitted Tesco was reviewing its options for US chain Fresh & Easy. Tesco first entered the US in 2007 but has yet to make a profit in the country. Last week, Clarke announced Tesco had started a “strategic review” of the business. He blamed the impact of the “unprecedented crisis in the markets” on the states the retailer had targeted on the West Coast and said Tesco was “likely” to quit the US.

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