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Indian Summer for Tesco?

Restrictive direct foreign investment laws in India have resulted in major international retail chains investigating alternative methods of investing in the Asian country.

Bharti Enterprises, a conglomerate in India, has been in talks with both Tesco and Wal-Mart about joint ventures.
Branded retail is a particularly restricted part of the Indian market. Foreign investors can own wholesale operations in India, as well as 51%of single-brand retail operations, but they may not own a majority stake in a multiple-brand retailer.

No details of a joint venture have been disclosed yet, but Tesco is rumoured to have the edge over Wal-Mart, since it already sources fresh food from Bharti. It also runs a non-food sourcing operation in Bangalore.

Bharti Enterprises is no stranger to this kind of joint venture: last year it set up a deal with foreign insurance company Axa Asia Pacific Holdings Ltd.

db May 2006

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