India likely to open doors to global supermkt giants: Scindia

London, June 5 (PTI) India is likely to open up its doors
for Tesco and other overseas supermarket giants to set up
multi-brand retail stores in the country, Indian Minister of
State for Commerce and Industry Jyotiraditya Scindia has
indicated.
"The way I envisage it is that it must involve investment
not only in the front-end, but also in the back-end," Scindia
told the Sunday Telegraph.
A committee formed to explore deregulation in the sector
has submitted a favourable report and ministers are preparing
to forward the proposal to Cabinet.
It is likely to include obligations on new entrants to
invest heavily in "back-end" warehousing, food processing and
refrigerated transport networks and to create new jobs in
rural India.
"For any foreign investor -- take your country (UK) for
example, your Tesco, or France's Carrefour -- today (the
market is) 100 per cent open in the cash-and-carry business.
"But if you extend that into the agricultural sector, I'm
sure they will like to come into the back-end and they must.
"That's where the value creation happens and if we can do
as much of that in the rural hinterland, it will assist their
business model from a cost point of view and it will assist
India's story in terms of inclusive economic growth," he said.
He said India is currently the world's largest producer
of milk, the second largest in fruit and vegetable output and
third in grain production, but barely 5 per cent of its
produce is processed and 30 per cent rots before it reaches
the market.
The government believes supermarket giants like Tesco,
Carrefour and Walmart can play a vital role in revolutionising
the sector and investing heavily in cold-chain logistics and
food processing.
Now, they are limited to "single-brand retail" and cash-
and-carry operations, but the carrot to lure them into heavier
investment will be the opportunity to open their own multi-
brand supermarkets as majority partners.
A Tesco spokesman said: "We already have a successful
franchise agreement with the retail arm of Tata to help them
grow their Star Bazaar hypermarkets and we are also developing
a wholesale business in India."
"We've made no secret of our desire to build a retail
business in India and would be very keen to bring these
benefits to Indian consumers if regulations permit," he said.