The retailer, part of Home Retail Group, is understood to be close to striking a joint venture deal with an Indian partner. K Raheja Corp, whose retail interests include the Shoppers Stop department store chain and fledgling hypermarket operation HyperCity, is said to be Argos's first choice.
A deal could be announced as early as Wednesday, when the retailer updates on third-quarter trading. It would be one of the most important initiatives launched by Home Retail Group since its demerger from GUS and Stock Exchange listing in its own right last October.
Argos tested stores in The Netherlands, but shut the loss-making outlets in 1998.
Should the deal go ahead, Argos would join a rising number of British and international store groups that have pushed into India in search of a share of spend in one of the world's fastest-emerging economies.
Shoppers Stop has partnerships with UK retailers Austin Reed and Mothercare, while HyperCity sells a range of Waitrose foods.
Next, Debenhams and Marks & Spencer are all developing their presence in the country, mainly through franchise deals. Tesco is searching for a partner and, in November, Wal-Mart struck a deal with Bharti to open stores.
At the same time, Indian retailers are expanding at an exponential rate. Reliance Retail has unveiled what is probably the most ambitious store opening programme in the world. The company has embarked on a£2.9 billion drive to open 4,000 shops by 2010 and has hired executives from Tesco and Asda to help.
India's US$330 billion (£170.72 billion) retail market is expected to grow at a rate of 10 per cent a year. At present, it is dominated by small chains and family-run stores, so there is huge potential for professional retail groups.
Kaupthing Singer & Friedlander analyst Matthew McEachran said India could 'work very well' for Argos. 'It's rapidly evolving. A joint venture would allow Argos to leverage local expertise, while sharing its unique retail model,' he said.
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