Tesco to open Indian supermarkets

<p>Tesco is launching a 50-50 partnership with India’s Tata Group.</p>

Tesco is set to invest tens of millions of pounds in India as the company looks to move into the country's growing supermarkets sector.

The firm, which is already the UK's dominant supermarket company, will spend $110 million (£68 million) as part of the partnership with India's Tata Group, which will be split 50-50.

An application has been handed in to India's Foreign Investment Promotion Board by Tesco asking for permission to open new supermarkets in the Asian nation.

Commerce and industry minister Anand Sharma stated that the country's government is in support of Tesco's attempts to invest in India. He said: "And on our part, we assure them all support for expedited clearances. To begin with, they propose to establish their stores in Maharashtra and Karnataka."

Tesco's plans

Tesco confirmed that it is planning to initially invest in the Tata-owned Trent Hypermarket Limited, which runs Star Bazaar and Star Daily in the western state of Maharashtra, as well as the neighbouring southern state of Karnataka.

"We hope that this will mark a new beginning in transforming India's retail industry. I am sure that the other global leaders will also look at investing in India," Mr Sharma added.

India's government revealed that it was to allow foreign investment in multi-brand retail in September 2012, but Tesco's is the first application to have got so far.

However, investors have not responded favourably to Tesco's attempts to break into the supermarket sector in India. The nation has a growing middle class that many companies from all over the world are now trying to capitalise on.

By 14:33 GMT, the share price of Tesco was 1.74 per cent down when compared to its price at the start of the day on the London Stock Exchange. Stocks were trading for 325.25, not far above the 52-week low of 323.90 previously recorded by the company.

As part of its efforts to grow the business around the world, Tesco previously held a series of talks with China Resources Enterprise over a potential merger in the country.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.