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Boby Kurian

"The entry into India looks logical. It satisfies the requirement of a large consuming market and has strong GDP growth projections, which makes it a good bet," Mr G. Shankar said.

Bangalore , Oct. 13

THE UK-based £28-billion retail giant Tesco sees entry into India as logical once the Centre allows Foreign Direct Investment (FDI) in the retailing sector. In the last five years, Tesco has expanded its business in Asia-Pacific region with presence in four countries, and generates nearly 15 per cent of its revenues from these markets.

"We currently have presence in South Korea, Thailand, Taiwan and Malaysia, while work is on in Japan and China is under consideration. The entry into India looks logical. It satisfies the requirement of a large consuming market and has strong GDP growth projections, which makes it a good bet," Mr G. Shankar, Managing Director, Tesco India Sourcing, said.

The question of allowing FDI in retailing has been a sensitive issue with most domestic retailers lobbying hard against it. The latest indication from Tesco, a feisty global discounter, could cause further ripples.

Tesco has over 900 stores in 10 countries and derives 30 per cent of its revenues from operations outside UK and Ireland. Its international operations are currently scattered in the developing economies of Central Europe and Asia. Tesco has the track record of roping in a local partner in its forays into new markets but keeps significantly high holding in such ventures.

Meanwhile, the operations of Tesco India Sourcing, a hub set up over three years ago for its non-food business, is expected to touch $200 million by 2004-05.

"In the ongoing year, 2003-04, we will touch $100 million. Currently, our sourcing operations cover metal-based hardlines, apparel, home furnishings and towels in softline category, and lately health and cosmetic products," Mr Shankar said. It must be mentioned that Tesco India's sourcing operations cover neighbouring markets such as Bangladesh, Sri Lanka and Indonesia. It is expected to add Pakistan to the list shortly.

He said Tesco would look at India and the region as a sourcing base for its mainstay food business. "We look at global cost competitiveness in sourcing as retail prices fall by the year. I think sourcing of foods from here is within the shooting range, in three years, may be. We could look at sourcing rice, dry fruits and ready meals as Indian ethnic food is gaining popularity in the UK," he added.

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