French retail giant Carrefour on Tuesday said it will exit its India business and has initiated talks with Reliance Retail and Bharti Enterprises to sell its assets in the country.
Carrefour, the world’s second largest retailer, operates five cash-and-carry wholesale stores in India, and has invested around `300 crore in the country.
“Carrefour announced its intention to close its five cash & carry stores in India where it has operated since 2010. The closure of Carrefour’s business in India will be effective at the end of September 2014,” the company said without giving further details.
Spokespersons for Reliance Retail and Bharti enterprises also declined comments.
India allows 100% foreign direct investment (FDI) in wholesale cash-and carry stores, but FDI in the $500-billion (`30 lakh-crore) multi-brand retail sector was allowed only in 2012. Foreign retailers such as Carrefour, Walmart and Tesco hoped to forge tie-ups with local players.
While Tesco has partnered with Tata’s Trent, Carrefour could not create a joint venture in India. Last year in October, Walmart parted ways with its partner Bharti Enterprises. Since then, the company has been focusing on expanding its cash-and-carry business and operates 20 such stores. It has since taken its wholesale cash-and-carry business to the online space.
British retailer Tesco has also announced plans to invest $110 million (`660 crore) to set up a supermarket in India in partnership with Tata’s Trent Hypermarket. Even German wholesaler Metro has been growing steadily and operates 16 cash-and-carry stores in India.
Retail analysts said Carrefour’s exit would hardly have any implications for India. “Carrefour has been in India for around 10 years and the very fact that it could open only five cash-and-carry stores indicates that the company had been struggling to find the right business model in the country,” said Arvind Singhal, chairman, Technopak Advisors, a consultancy firm.