The Foreign Investment Promotion Board (FIPB) today approved UK-based Tesco Plc's proposal to enter the Indian multi-brand retail segment in joint venture with Tata Group company with an initial investment of USD 110 million (about Rs 680 crore).
Tesco proposal entailing investment of USD 110 million has been cleared, sources said after the FIPB meeting held here.
After the approval, Tesco will pick up a 50 per cent stake in Trent Hypermarket Ltd, a wholly-owned subsidiary of Trent Ltd, a Tata group company.
Tesco is the first global retailer to apply for multi-brand retailing after the government allowed 51 per cent FDI in the segment in September last year.
Trent Hypermarket runs 16 outlets in the southern and western regions with support from Tesco.
The UK retailer plans to sell 14 categories of products, official sources said. The items to be sold at its stores include tea, coffee, vegetables, fruits, meat, fish, dairy products, wine, liquor, textiles, footwear, furniture, electronics and jewellery.
The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, considered 12 items including Tesco's FDI proposal.
India allows FDI in most of the sectors through automatic route, government approval is required in certain sectors sensitive for the economy.
FIPB nod will allow setting up JV with Trent: Tesco
The approval by FIPB to the proposal to invest USD 110 million in the Indian multi-brand retail segment will allow to work on practicalities of setting up a joint venture with Tata group firm Trent, UK-based Tesco Plc today said.
"Tesco is pleased that the FIPB has agreed to our proposal. This will now allow us to work on the practicalities of setting up the Joint Venture with Trent. Any such announcement will be made in the usual way," a Tesco spokesperson said.
The UK-based firm became the first global retailer to get approval to enter country's multi-brand retail sector from the Foreign Investment Promotion Board (FIPB) since the government allowed 51 per cent foreign direct investment (FDI) in multi-brand retailing in September last year.
The retail major plans to initially invest USD 110 million in the multi-brand retail foray, including for the acquisition of 50 per cent stake in Trent Hypermarket Ltd, a wholly-owned subsidiary of Trent Ltd.
In 2008 Tesco PLC had announced setting up of a wholesale cash-and-carry business in India, with an initial investment of up to 60 million pounds in the first two years.
It had also entered into an exclusive franchise agreement with Trent to provide