Need to study India's sourcing clause in multi-brand retail FDI before opening stores: Tesco

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SummaryThe UK-based retail giant Tesco today said it is looking at opening retail stores in India but it would have to first study the "unusual" sourcing conditions for FDI in multi-brand segment before deciding on it.

The UK-based retail giant Tesco today said it is looking at opening retail stores in India but it would have to first study the "unusual" sourcing conditions for FDI in multi-brand segment before deciding on it.

"We are very interested in India and obviously looking at that...(but) I think we haven't taken any decisions yet," Tesco UK, Executive Director, Corporate and Legal Affairs and Member of Board, Dame Lucy Neville-Rolfe told reporters on the sidelines of World Economic Forum on India here.

She was responding to a query on when would the first Tesco retail store be opened in India since the government has allowed up to 51 per cent FDI in multi-brand retail.

Asked about the requirement of foreign multi-brand retailers to source 30 per cent of their products from micro, small and medium enterprises, she said: "Clearly we need to study the conditions.

"It's unusual to have these conditions but we very much understood that the government is coming from, in wanting to ensure the supply chain is improved and other facilities."

She further said: "I think we need to understand exactly what it means...We would look forward to talk to them (government)."

Neville-Rolfe, however, added Tesco exports half a billion goods out of India and "that gives some interest and comfort".

Stressing that "the conditions are new departures for us" she said at the moment the company is "happy with the relationship we have had in Trent as part of Tata".

Tesco has a franchise arrangement with Trent, she said, adding "many of the goods you see in the (Trent) 15 stores are supplied by the wholesale operations we have set up".

When asked would Tata's be the natural partner as and when Tesco decides to enter the multi-brand retail in India, she said: "If you look at the existing FDI proposal, they involve a partnership, so we are thinking how we do that."

Bullish on the potential of the retail sector in India, Neville-Rolfe said more and more consumers are expected in India and "that's why we are here. We have got huge operations in Bangalore (with) 6,500 people doing amazing work".

The UK-based retailer had entered into a partnership with Tata group firm Trent in 2008 for providing back end support to the latter.

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