Summit-Tesco says in JV talks with Indian co

LONDON, June 21: Tesco Plc, Britain's largest retailer, said on Wednesday it was in talks with many Indian firms for a joint venture, but that it was a long way from entering Asia's third-biggest economy.

India in January allowed single-brand foreign retailers to take 51 percent in local joint ventures. Multiple-brand retailers can only set up olesale or franchise operations. The rules are expected to be eased over the next two years.

''We've spoken to a lot of people, (but) we are at a stage where we haven't even done a feasibility stage. We're a hell of a long way off,''Finance Director Andrew Higginson said at the Reuters Consumer and Retail Summit on Wednesday.

''We won't be there in a few months. It will be more than a year. I wouldn't want to put a date on it,'' he said.

India's Bharti Enterprises -- which partly owns Bharti Airtel -- has said it was in talks with Tesco and other major retailers including Wal-Mart Stores and Carrefour for its retail venture.

It is expected to finalise a partner in a few months.

Higginson said fast-expanding economies like China and India posed challenges such as high property prices.

''One of the challenges in some of these markets -- and China is a good example of that -- is that when they overheat in terms of general expectations around the opportunities, and you know one of the challenges is property,'' he said.

''India is tricky because things have gotten ahead of themselves there,'' he said.

Tesco has a support centre and a sourcing office in India, and has invested about million in its operations there. It plans to step up headcount at its back office in Bangalore to 2,000 from nearly 1,500 now, Higginson said.

Higginson said Tesco was looking at stepping up sourcing from India, but that it needed a deeper understanding of the country.

''India's not a shoo-in. There are lots of positives in terms of the economy and a big and growing middle-class,'' he said.

''But you have to get into details like how people shop, who does the shopping, and the organisation of the supply chain.'' India's branded retail sector, which makes up just 3 percent of the total market, is valued at about billion and forecast to grow at 25-30 percent a year over the next four years.

REUTERS