India does not yet have a big a supermarket sector, food shopping still following traditional patterns, and only 3% of the retail market operating as ‘organised retail.’ However, many factors including its high population and rapidly developing economy, are tempting major retailers. A major Western-style superstore, Hypercity, opened in Mumbai in 2006. An Indian-based retail chain, Reliance Fresh,was launched, opening its first stores in Hyderabad in November 2006, and planning for 4,000 stores within three years. The Kishori-Bayani owned Future Group also plans to increase its floorspace in India from 3.5 m to 30 m. See a Guardian special report on India’s retail market.
Tesco, Carrefour and WalMart all worked hard to enter partnerships with Indian-based companies, as foreign investment in India is limited by restrictive national policies. Negotiations by Tesco over a potential deal with Indian firm Bharti Enterprises failed and WalMart announced a deal with Bharti in November 2006 with plans for hundreds of stores.
In February 2007, Tesco re-entered negotiations with a number of prospective partners in India. See coverage in the Daily Telegraph for further information.
In 2008 Tesco set up a wholesale business and provides 70% of the products used in the Star Bazaar hypermarket chain owned by the Tata group. It had planned to be in the country when law changes allowed foreign retailers to open up – but a change in government strategy continues to face delays and the business is tiny. Total sales growth fell back to 25%, in local currency, from 40% last year. Tesco says it wants to "refocus on a more profitable approach to growth" (figures from an article in The Guardian, 18th April 2013).
In June 2013 the Indian Government clarified the rules it announced last year to confirm that foreign supermarkets entering India must invest in new supply chain infrastructure, such as warehouses and cold-storages, rather than buying existing assets. The government allowed global supermarket operators to enter India in September, and stipulated at the time that at least 50 percent of the investment made by the foreign company must be in supply chain infrastructure. However, it was not clear at that stage whether the investment would have to be in new facilities or whether existing assets could be purchased. The government’s clarification could encourage global retailers such as Wal-Mart Stores Inc, Carrefour and Tesco to set up retail stores in India. So far, the country has not received any applications from foreign supermarket groups to open retail outlets.