Carrefour sees hopeful signs in restrictive India market

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Tue May 11, 2010 9:09am BST

By Rina Chandran

NEW DELHI May 11 (Reuters) - No. 2 global retailer Carrefour (CARR.PA) sees signs of an improving investment climate in India, a senior official said, as it looks to build its presence in a restrictive but fast-growing market that has long tantalised and frustrated foreign operators.

The French retailer will soon announce its Indian franchise partner and will open its first cash-and-carry store in the next few months, said Jean Noel Bironneau, managing director for the Indian unit of Carrefour.

"There are positive signs the government is making the right moves for foreign investments for businesses," he said at the launch of a farmers' programme, but declined to give specifics.

Carrefour, the No. 2 retailer behind U.S. group Wal-Mart (WMT.N), is close to signing a deal with Future Group, India's largest retailer, to open stores under the French retailer's name, senior Future Group officials said last week. [nSGE64303A]

Global retail chains have long been frustrated in their efforts to set up shop in the world's second-fastest growing major economy, where organised retail accounts for just 6 percent of industry sales and incomes are rising quickly.

Carrefour, which has been looking to break into the India market for seven years, will join retailers such as Wal-Mart and Germany's Metro AG (MEOG.DE) in operating so-called cash-and-carry, or wholesale, ventures in India. "We do not think we are at a disadvantage," said Franck Kenner, director of operations for Carrefour India, referring to its entry into the Indian market after its global rivals. "The pace of expansion of the others have not been so fast."

Foreign firms are prohibited from owning multi-brand retail chains in India, a rule that protects small operators and local chains and is not expected to be relaxed in the near term given political opposition.

"If there is a way we can operate hyper market, we will applaud the decision," Bironneau said. "Meanwhile, we are waiting, everyone is waiting for the government's decision."

He said the share of organised retail in India can more than double in two to three years.

Carrefour exports textiles and fresh produce worth $170 million from India, and Bironneau expected this to rise quickly after the launch of its operations in India.

(Writing by Sumeet Chatterjee; Editing by Tony Munroe)

((sumeet.chatterjee@thomsonreuters.com; +91-22-6636 9068; Reuters Messaging: sumeet.chatterjee.reuters.com@reuters.net))

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