Marks and Spencer to invest $58 mn in India

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Mumbai, April 21: : British retailer Marks and Spencer aims to step up the pace in India with its new joint venture with Reliance Retail and says it expects the fast-growing market to be more significant than China.

M&S, which expects its international business to make up 15-20 percent of total revenues in the next five years, said on Friday it would take 51 percent -- the maximum permissible by Indian law -- in a venture with Reliance Retail, a subsidiary of Reliance Industries Ltd.

Marks & Spencer Reliance India Pvt Ltd will open at least 50 new stores in India over five years to sell apparel and homeware, with an initial investment of up to 29 million pounds ($58 million).

The UK retailer's previous franchise partner Planet Retail, will continue to operate the 14 existing franchise M&S stores.

"When we looked at the market and the scale of opportunity here, we realised a joint venture was the way to do it, as it gave us a lot more involvement in the business," Mark Ashman, chief executive of M&S Reliance India, said at the weekend.

M&S last month announced a franchise arrangement to expand into the Middle East and is setting up a wholly-owned store in Shanghai. But India, despite its controls, will be significant.

"India, I think, is more important than China because of the scale of the market and because the M&S brand is already well known here," Ashman told Reuters by telephone.

TRENDY TO BE IN INDIA

M&S's increased presence comes at a time of heightened interest in India's fragmented retail industry, which is forecast to nearly double in size by 2015 from about $350 billion.

Bharti Retail last week opened its first food and grocery stores, ahead of the launch of wholesale cash-and-carry centres it plans with Wal-Mart Stores Inc later this year.

France's Carrefour has said it is in final talks for an India partner, while Tesco also intends to enter.

Foreign multiple-brand retailers are only permitted wholesale and franchise operations in India, where the expansion of modern retail has sparked political concerns and protests from small traders over potential job losses.

"We are optimistic of the regulatory environment," Ashman said.

"We could've sat back and waited till the rules were changed, but we made the decision to enter. I'm sure changes will happen."

Reliance is spending more than $5.5 billion on retail. It has been forced to close some of its convenience stores in some states due to local opposition.