Netherlands-based retail group Spar International has re-entered the Indian market with a licensing deal with local retailer Max Hypermarkets.

Max Hypermarkets, owned by the Dubai-based Landmark Group, will open Spar-branded hypermarkets and supermarkets across India.

Spar's move comes just months after it ended its first foray into India. Spar and former local partner Foodland ended their venture after three years in Mumbai.

Under the plans, the two companies plan to open seven new stores over the next two years. The first two outlets are expected to open in Bangalore next month.

"Developing Spar Hypermarkets in India is a key element in our strategic plan. India is a market with enormous potential," said Spar International managing director Dr Gordon Campbell.

Landmark chairman Micky Jagtiani said the tie-up with Spar would help the Dubai-based in its expansion into food retailing.

"We do believe that this association will help the Group to expand into food retailing and bring in international standards and operations on par with the rest of the food retailers globally," Jagtiani said.

Spar's venture is the latest move from foreign retailers into India's fast-growing retail sector. Direct foreign investment into Indian retailing is limited to wholesale and franchise operations but multinationals are eyeing growth in the sector with interest.

Earlier this month, Wal-Mart set up a wholesale cash-and-carry business to serve the Indian retail sector with Indian conglomerate Bharti Enterprises.

Local retail groups are also busy drawing up expansion plans. Last week, Reliance Retail plans to invest US$6bn in expansion over the next four years.

Reliance plans to expand its store network from 250 to around 5,000 outlets across India by 2011.