Tesco has announced plans to develop a wholesale cash-and-carry business in India, with an initial investment of up to £60m in the first two years.

Based in Mumbai, the new wholesale outlets will offer a comprehensive range of fresh food, grocery and non-food products to small retailers, restaurants, kirana stores and other business owners. The business is also designed to provide farmers and other suppliers with an efficient route to market.

At the same time, Tesco is entering into an exclusive franchise agreement with Trent, the retail arm of the Tata Group, to support the development of its hypermarket business, Star Bazaar. Trent currently has four hypermarkets, with plans to grow to 50 stores over the next five years.

Under the terms of the agreement, for which Tesco will receive a fee, Tesco’s wholesale business will supply merchandise to Star Bazaar.

Tesco had made no secret of the fact it was planning to move into India but was waiting for the right partner. Sir Terry Leahy, CEO of Tesco PLC, said, “This is another exciting development for Tesco. It complements our entries into China and the United States, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses.

“We are delighted to be working with Tata, one of India’s largest and most respected business groups. Our agreement will enable us to share our international retail expertise, supporting Trent in the development of their Star Bazaar hypermarket business and benefiting Indian consumers.”

Noel N. Tata, MD of Trent Ltd, said, “We are extremely excited about our association with Tesco. Our ability to access Tesco’s retail knowledge and expertise will play an important role in our endeavour to offer a unique shopping experience to customers across the country."