British supermarket giant Tesco is set to become the first foreign retailer to set up a chain of stories in India.
India’s Foreign Investment Promotion Board (FIPP) has approved a €80 million investment plan by Tesco.
The deal involves Tesco buying a 50% stake in Tata Group’s Trent Hypermarket.
News agency Reuters reports Tesco is now expected to open three or four stores a year under a slow expansion plan designed to comply with Indian regulations.
FIPP also approved a proposal by British telecoms group Vodafone to take full ownership of its Indian business.
Tesco’s decision to invest in India is seen as a vote of confidence in an economy that grew at its slowest pace in a decade in the past fiscal year and is struggling to attract foreign investors.
The venture also provides a boost for the Indian government after its decision to open up the supermarket sector in September 2012 received a muted response from overseas retailers put off by ambiguous foreign participation rules and political opposition.
In October the world’s biggest retailer Wal-Mart called off a joint venture with India’s Bharti Enterprises, citing unfriendly regulations.