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Rediff.com  » Business » Modi win is blow for Tesco but good for investors

Modi win is blow for Tesco but good for investors

April 09, 2014 08:41 IST

Image: BJP's prime ministerial candidate Narendra Modi.
Photographs: Rajesh Karkera/Rediff.com Andy Mukherjee

A win for Narendra Modi would be bad news for Tesco and its rivals, but good news for other investors.

The Indian opposition leader's party says it won't allow foreign supermarkets to enter the country if it wins the general election. But that is just one discordant note in a manifesto that is sweet music to financial markets.

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Modi win is blow for Tesco but good for investors

Image: Retail giants like Tesco may have tough time if BJP comes to power.
Photographs: Reuters

The decision by Modi's Bharatiya Janata Party (BJP) will leave some retailers fuming. Britain's Tesco, which has already received approval from the current Congress Party government to start a joint venture with the Tata Group, may have to drop its plans.

Carrefour, which said last month that it was "thinking about India," will be able to do little more if the pronouncements become national policy.

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Modi win is blow for Tesco but good for investors

Image: Local businessmen are Modi's biggest supporters.
Photographs: Reuters

Modi's decision is a calculated move. The BJP counts the owners of several million mom-and-pop stores as among its most loyal supporters. Besides, the manifesto makes it clear that foreign money will be welcome in practically every other industry.

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Tags: BJP , Tesco

Modi win is blow for Tesco but good for investors

Image: BJP's assurance of tax reforms in telecom sector will cheer firms like Vodafone.
Photographs: David W Cerny/Reuters

The document also promises to cut red tape, expedite project clearances and make India an easier place to do business. The party's commitment to end "tax terrorism" will cheer telecom operator Vodafone, which has fought the Indian authorities for six years over a $2 billion claim. 

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Tags: Tesco , India

Modi win is blow for Tesco but good for investors

Image: BJP has promised to start nationwide market for farm produce.
Photographs: Rupali De Chowdhuri/Reuters

The BJP has also pledged fiscal discipline and said it will start a nationwide market in farm produce to deal with inflationary food shortages.

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Tags: BJP , Tesco

Modi win is blow for Tesco but good for investors

Image: Ceiling on FDI in insurance sector may be raised if BJP comes to power.
Photographs: Uttam Ghosh/Rediff

The party remains vague about banking reforms and made no mention of the long-pending plan to raise the ceiling on foreign investment in insurance companies to 49 percent from 26 percent. 

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Tags: Tesco

Modi win is blow for Tesco but good for investors

Image: BJP has also committed to restart privatisation after coming to power.

Another notable absentee from the manifesto was a commitment to restart privatisation, which came to an end when the BJP lost power ten years ago.

That coyness is easy to understand, though. Such a pledge would have been politically immature without first securing the backing of regional parties which are likely to form part of any BJP-led coalition government.

Tags: BJP , Tesco

Modi win is blow for Tesco but good for investors

Image: India may become hotspot for investment if Modi becomes the next Prime Minister, says BJP.
Photographs: Reuters

Overall, though, Modi's message will also raise expectations that the election outcome can reverse the deterioration in the country's investment climate. If performance fails to strike equally high notes, Tesco and Carrefour won't be the only disappointed investors.

Source: REUTERS
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