Shares of four organised retailers rose by 1.77% to 8.76% at 14:01 IST on BSE after UK's largest retailer Tesco announced that it is planning to enter multi-brand retailing in the country in partnership with Trent.
Trent (up 8.76%), Future Retail (up 3.17%), Store One Retail India (up 2.29%) and Shopper's Stop (up 1.77%), edged higher.
The S&P BSE Sensex was up 230.86 points, or 1.12% at 20,843.
Trent announced that it was in discussions with Tesco regarding an investment by Tesco in Trent Hypermarket (THL), which operates the Star Bazaar business and is engaged in multi-brand retail trading. In this context, Tesco is making an application to the Foreign Investment Promotion Board. If the application is successful, the intent would be to enter into a partnership where Trent and Tesco will each own a 50% stake in THL, Trent said in a statement.
THL currently operates 16 stores across the Southern and Western regions of India. The proposed partnership will operate and build on the existing portfolio of Star Bazaar stores in Maharashtra and Karnataka. The application envisages a minimum foreign direct investment (FDI) in line with the applicable multi brand retail trading policy, the company said.
In September 2012, the Government of India had allowed 51% FDI in the multi-brand retail sector, but the sector has failed to see any investment so far due to stringent rules set by the government.
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The government on 6 June 2013 clarified that the foreign supermarkets entering India must invest in new supply chain infrastructure, such as warehouses and cold-storages, rather than buying existing assets. The government had stipulated that at least 50% of the investment made by the foreign company must be in supply chain infrastructure.
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