Tesco's $110m India expansion given go-ahead

Discussion in 'Economy & Infrastructure' started by Vishwarupa, Dec 31, 2013.

  1. Vishwarupa

    Vishwarupa Senior Member Senior Member

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    BBC News - Tesco's $110m India expansion given go-ahead

    Tesco's plans for expansion into India have been approved by the country's government.

    The British retail giant intends to invest $110m (£68m) in India's closely-protected retail sector.

    It will set up a chain of supermarkets in partnership with the Indian Tata Group.

    Tesco is the first global food retailer to get approval to invest in India since the government decided to open up the supermarket sector last year.

    India's Foreign Investment Promotion Board (FIPB) also approved a proposal by the British telecoms group, Vodafone, to take full ownership of its Indian business.

    However, this deal will need to go through several stages before it is complete.

    A woman browsing jeans in a shop in India
    India's consumers are an increasing focus for many international companies
    The approvals are seen as a vote of confidence in India's slowing economy which has struggled to attract foreign investment in the past because of restrictive bureaucracy and political opposition.

    A Tesco spokesman said the company could now start work on the "practicalities" of setting up its joint venture with Tata.

    Liberalisation
    The deal itself sees Tesco take a 50% stake in Tata Group's Trent Hypermarket.

    The company already supplies much of the produce in Tata's Star Bazaar shops, and has been in partnership with Tata since 2008.

    Though the rubber-stamping of the Tesco plan will be taken as a good sign of the liberalisation of India's retail laws, in October, the world's largest shop group Wal-Mart terminated its joint venture with India's Bharti Enterprises, after it faced regulatory hurdles.

    Protests in India in 2012 against foreign direct investment
    There were protests in some cities 2012 against the opening-up of the food sector
    However, others, such as Hennes & Mauritz (H&M), have also been given final approval by India's government to open stores there.

    The Swedish retailer announced in early December it planned to invest 7.2bn rupees ($115.5m; £70.2m) and open 50 stores across the country.

    Marks and Spencer has also been keen to seize the potential of India's retail market. It already has a presence in India, and it plans to double its store count to 80 - making the country its biggest overseas market.

    India's rules governing foreign direct investment (FDI) in the retail sector were eased in August 2013.

    Previously, it was compulsory for foreign supermarkets to source 30% of their products from small Indian firms. The government now allows foreign firms five years in which to reach that target, giving them the option of importing goods from overseas initially.

    Foreign retailers will also be allowed to set up shop in cities with a population of fewer than one million - they had previously been banned.


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    Instead of 5 years GOI should have capped it to 24 months, i feel 5 years is too long & Indian manufacturers will lose on this. Bad decision.
     
    Last edited: Dec 31, 2013
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  3. TrueSpirit1

    TrueSpirit1 The Nobody Banned

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    Won't BJP oppose this when it comes to power ?
    @Singh @VIP @parijataka @aragorn @Mad Indian @Virendra
     
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  4. Blackwater

    Blackwater Veteran Member Veteran Member

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  5. TrueSpirit1

    TrueSpirit1 The Nobody Banned

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    Obviously, but BJP has been opposed to FDI in multi-brand retail to keep the bania-lobby (its core votebank) happy.

    What would Modi do ? @Dovah
     
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  6. Blackwater

    Blackwater Veteran Member Veteran Member

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    $$$ for country , jobs for youth, exposure and variety for Indian consumer is more imp than few indian baniya interest
     
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  7. Vishwarupa

    Vishwarupa Senior Member Senior Member

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    At the same time lot of Indian medium/small entrepreneurs(SMEs) in India will lose their business. This move will not encourage entrepreneurship in India.

    Foreign retailers investing in India should source 50% of the product from India & GOI should limit the capping to the intended to maximum 24 months. 5 years is tooo long a period for looting & in these 5 years Indian SMEs will be wiped out of competition.

    SME cannot sustain for 5 years in India until unless there is strong backing by Indian government.
     
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  8. Blackwater

    Blackwater Veteran Member Veteran Member

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    india is a huge country ,they got plenty of rooms to do business.


    if this is the case y SME does not suffer in UK or america ro canada or EU???
     
  9. TrueSpirit1

    TrueSpirit1 The Nobody Banned

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    @Ray Sir, how do you view this decision ?
    @pmaitra ?
     
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  10. Free Karma

    Free Karma Senior Member Senior Member

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    I remember modi saying he was completely against FDI in retail. In one of those magazine typw QnA sessions. When he was told it was BJP's idea initially, he responded by saying, I am still against FDI in retail, I do not think it's a good Idea,as our small businessmen and retailers lose out,and our nation becomes a dumping ground for goods. I'll try to find the video. I agree with him..I dont like this move. I think the 30% rule was also reduced to some 20 something percent...not sure

    http://www.youtube.com/watch?v=buQQFIAwhnM

    EDIT: For the Question on FDI goto 33: 35. HE also states decisions like this need to take the state administration into account.
     
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  11. VIP

    VIP Ultra Nationalist Senior Member

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    Modi already opposed FDI in retail, he said he believes in AMUL type of cooperation in retail sector, not some big names like Walmart monopolize the market.
     
  12. VIP

    VIP Ultra Nationalist Senior Member

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    Personally, I want this thing happened already as it benefits consumers a lot but I really can't predict the situation of local retail market after. BJP may or may not be right.
     
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  13. TrueSpirit1

    TrueSpirit1 The Nobody Banned

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    Personally, I give two hoots about the interests of bania-lobby (particularly, the middlemen). As long as it is benefiting the farmers & consumers, eliminating middlemen, generating jobs & infusing state-of-the-art technology in supply-chains, it is good enough for me.
     
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  14. VIP

    VIP Ultra Nationalist Senior Member

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    That baniya lobby is also Indians and many jobs depend on that middle man , transport to labor. Millions of people will be jobless. You can't harm them. Farmers aren't gonna be benefiting. It's not that easy.
     
  15. SilentKiller

    SilentKiller Regular Member

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    True, But indian politicians never think of future but think about votes.
    They say they think about farmers and poor, but if we bring organised system its against them?? never understood that.

    My grandfather used to farm post retirement and will alway plant cash crops as they have Minimum price to get.
    He once told me that even if onion is selling in city for Rs 70 or 80, a farmer is still selling it in range from Rs 5-10 range.
    Few with their trolleys and living closer to towns can deliver and even sell their produce in Daily mandis as they happen in my city chandigarh, we have a mandi is every 3rd sector every next day and few (very few) farmers bring and sell their produce.

    It will be great for both farmer and consumer if middle men is removed.
    I say middle men in india are bad every where defence or consumer goods or food produce. Organised sector is good same should be with farm goods.
    Please visit a mall and see how many people are getting employed there, a big mall employees 1000's its time for us to chose between few small traders or vegetable vendors and employment for 1000's and small poor vendor can be employed there too on fix salary..
     
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  16. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    It is a double edged sword. There will be plenty of employment opportunities but they are not quality jobs. You will be flooded with cheap Chinese crap with Western corps pocketing the profits. Jobs, infrastructure for what? Selling your soul?
     
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  17. amoy

    amoy Senior Member Senior Member

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    even without access of FDI what r indigenous retailers selling? still Chinese craps mostly right? it doesnt make much difference so long as Indian manufacturing remains status quo.

    mega chain stores Tesco and the likes do hav edges in centralized procurement quality control and logistics thanks to its sheer size and managerial efficiency. hence consumers will benefit abv all.

    certainly the employment they generate may not b called "quality jobs". but think the other way- what alternatives do youth usually hv in Indian labour market? traditional mom-n-pop stores or street hawkers dont provide much employment do they?

    Sent from my 5910 using Tapatalk 2
     
  18. TrueSpirit1

    TrueSpirit1 The Nobody Banned

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    But, in India, middlemen alone are running the country, through their funding of political parties. They corner the entire profit margins, leaving very little to nothing for the farmers & cultivators. Then , the consumer has to pay a very hefty price for goods (highly inflated prices).

    Just try to find out the prices at which daily produce is sold by farmers, add all the expenses involved in moving it to the consumer ( & all storage & labour charges) & then compare it to the actual price at which those are sold. The profit margin for this middlemen is beyond what sense allows. This trend has intensified exponentially in last decade, so the rot needs to be stemmed at the earliest. Then, the debt trap these people cultivate in rural areas need no mention. Our cultivators deserve something beyond suicide & entire farmer families committed suicides.

    I still believe middlemen ought to be firmly eradicated from the supply-chain as a whole (forever) & retailers should buy directly from farmers. Farmers, before anyone else, deserve the price of their toil & consumers should only pay the optimum price, without getting fleeced, as a matter of habit.

    I do understand that it is not this simple but essentially, this is what should be done for the benefit of nation: Total exterminations of so-called-Indians (the middlemen) who have held the nation, the poor & everyone else, alike, to ransom since forever.
     
  19. Ray

    Ray The Chairman Defence Professionals Moderator

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    Cameron's magic seems to have worked!
     
  20. Mad Indian

    Mad Indian Proud Bigot Veteran Member Senior Member

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  21. SPIEZ

    SPIEZ Senior Member Senior Member

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    1) $$ for the country agree
    3) exposure and variety for Indian consumers agree
    But (2) jobs for youth >>> The only kind of jobs I can see are the low paying jobs. I can only see a Saravana stores like job market here.(Low salary, poor living conditions with limited opportunity to leave the place)
     

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