Tesco 'reassured' on India retail sector

The boss of British supermarket Tesco held talks with officials in New Delhi Friday about India's new foreign investor retail policy as the chain decides on its strategy for the emerging market giant.

The meeting between Tesco chief executive Philip Clarke and Indian officials came after the government last September changed its rules to allow international supermarkets to establish multibrand stores in the potentially lucrative sector.

Clarke gave no details about any move by Tesco -- one of the world's leading retailers -- to open stores in India. But he said he felt "reassured" after talks with trade minister Anand Sharma over "some small concerns".

"I think it was important today that we heard from the minister about some of the small concerns we have. There will be important points of clarification in the months ahead," Clarke told reporters.

"We are very pleased with the meeting, reassured. And now we need the important points of clarification and then you'll be hearing more from us," Clarke said without elaborating.

Multibrand retailers such as Tesco and France's Carrefour had voiced interest in setting up shop in India after the government opened the $500 billion sector to foreign direct investment (FDI) in hopes of boosting their global presence.

But lately they have turned cautious as they grapple with declining earnings and falling consumer spending. Tesco recently took a $1.8 billion earnings hit from its failed US division Fresh & Easy.

Foreign supermarkets can now hold stakes of up to 51 percent in multibrand retailers. But they remain apprehensive because the opposition Bharatiya Janata Party says it might reverse the policy if it wins the 2014 general election.

The supermarkets are also seeking more clarity on the issues of mandatory sourcing from India and big-ticket investments required for infrastructure.

AFP