British retail major Tesco’s purchase of a 50% stake in Tata Group firm Trent Hypermarket, the first foreign direct investment (FDI) transaction in multi brand retail since the sector was opened up in 2012, has got the approval from the Competition Commission of India (CCI).
The watchdog’s order comes at a time when a government led by the BJP, which has a stated policy of opposing FDI in retail stores selling multiple brands, has just taken over. According to the new commerce minister Nirmala Sitharaman, multi-brand retail is best not opened up now for FDI as small and medium-size traders and small farmers have not been adequately empowered.
“...if you open up the floodgates of FDI in multi-brand retail, it may affect them,” she said on Tuesday, while responding to a question on whether the new government would rescind the current policy allowing foreign investment in the sector. But she didn’t say how the BJP-led government would deal with the policy or the approval already given when a Congress-led coalition was in power.
The Foreign Investment Promotion Board (FIPB) in December 2013, approved the UK retailer’s about Rs.680-crore investment proposal. In September 2012, the UPA government had allowed up to 51% FDI in the sector.
In its order, the competition body said that it doesn’t expect the proposed combination “to have appreciable adverse effect on competition in India”. Trent Hypermarket currently operates just 16 retail stores. Its total revenue, as per the annual report of Trent, during the financial year 2012-13 was only around .Rs.785 crore, which is insignificant as compared to the size of the overall retail market and the organised retail market in India, the commission said.
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