BJP's victory in state elections may impact Tesco’s India plans

The only multi-brand retailer, UK-based retail chain Tesco, which is diligently

pursuing its India plans with Tata arm Trent, may feel the impact of BJP’s poll victory in the Maharashtra and Haryana Assembly elections. Narendra Modi-led BJP has always expressed its opposition to multi-brand FDI policy and Tesco is the only foreign multi-brand retailer to have made a proposal to operate stores in India.

Tesco was planning to aggressively go forward with its expansion in Maharashtra. However, with BJP replacing the Congress in Maharashtra and Haryana, Tesco may suffer a major setback despite both being major industry hubs as well as attractive retail destinations. Most prominent domestic retailers, including the Future Group and Reliance Retail, have significant presence in these states.

While the merchandise retail consumption of the top 15 cities of India is about 114 billion dollars (around Rs 6.8 lakh crore), that in Greater Mumbai and national capital region clusters alone account for about 42 billion dollars (about Rs 2.5 lakh crore), according to a recent study by Technopak Advisors, a retail consultancy.

Tesco and Trent in March signed an agreement to form an equal JV in Trent Hypermarket, which operates the Star Bazaar retail business in India, with the UK retailer committing an investment of 85 million pounds (over Rs 840 crores). The JV plans to add another fiver stores in Maharashtra and Karnataka to existing 12 Star Bazaar stores.