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More dollars to flow in Indian retail post Tesco clearance

Raghavendra Kamath, Business Standard

Mumbai, December 30, 2013

More foreign investments could flow in $450 billion-worth Indian retail after Foreign Investment Promotion Board (FIPB) today gave approval to Tesco-Trent’s proposed JV.

According to retail industry executives, some of the top European, Japanese and Korean retailers are seriously pursuing Indian retail.

Leading the pack is French retail giant Carrefour, which is expected to apply with the government by March next year, said sources in Ministry of Commerce and Industry.

Carrefour has already spoken to Kishore Biyani’s Future group and Shoppers Stop owned Hypercity for possible alliance, sources in retail industry said.

Hypercity, and Aditya Birla have already said that they are open to getting foreign partners in their ventures. “It (approval) paves the way for others like us to look at possible partnerships to take it to next logical level,” said Govind Shrikhande, managing director of Shoppers Stop.

Retailers were keenly observing how approvals would be given to Tesco’s application to pick up 50% stake in Trent Hypermarkets run by Tatas. Though government talked about fresh investments in Indian ventures, Tesco was investing in existing chain of Trent, thereby triggering debate that whether it was a brownfield or greenfield venture.

“Earier, it was meant that FDI can come only in Greenfield projects. If the government has cleared this proposal, it means FDI is allowed in brownfield also,” Shrikhande said.

Said Kishore Biyani, founder chief executive and founder of Future group;” “We have to study the whole thing before coming to any conclusions.”

Some like Devangshu Dutta, chief executive of Third Eyesight said the policy remains the same and the government is still talking about fresh investments.

“If any Indian retailer is looking at adding new facilities at back end and front end and looking for FDI, the policy will benefit them and not for the retailers who are looking to capitalise on existing facilities,” Dutta said.

According to a senior director of consulting firm, some activity in FDI in retail will happen between now and elections. “But most of the action will happen after elections.”

(Sourced from Business Standard .)

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