London Tesco announced on Tuesday plans to open wholesale grocery stores in India that will supply goods to hypermarkets owned by Indian conglomerate Tata Group.
"This is another exciting development for Tesco," the group's chief executive Terry Leahy said in a statement. "It complements our entries into China and the United States, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses.”
Tesco said it would invest up to 60 million lbs. (USD$114 million) over two years to help develop its wholesale business.
"Based initially in Mumbai, the business will benefit from over a decade of experience of setting up local businesses in international markets," the company said.
Tesco also said that it was entering into an "exclusive franchise agreement" with Trent, the retail arm of Tata Group. Trent will pay a fee to Tesco in return for retail and technical support as the former aims to grow its number of Star Bazaar hypermarkets to 50 from four presently over the next five years.
"We are delighted to be working with Tata, one of India's largest and most respected business groups," Leahy added in the statement.
"Our agreement will enable us to share our international retail expertise, supporting Trent in the development of their Star Bazaar hypermarket business and benefiting Indian consumers."