Carrefour may be preparing to exit India as retail FDI prospects dim

French retail chain Carrefour - the world's second biggest after Walmart - has started downsizing its Indian operations and reportedly preparing to exit the market altogether after talks to sell its five wholesale stores to Sunil Mittal's Bharti Group failed; and the company seeing little hope of the new government next month allowing foreign chains to set up multi-brand outlets in the country.

There have already been senior-level exits from Carrefour India, and some employees may be asked to leave over the next few weeks. The company has five stores in India (Delhi, Jaipur, Bangalore, Meerut and Agra).

The €76-billion Carrefour has recently shut down operations in several Asian countries. It now sees little scope in India, as almost all political parties apart from the Congress are against allowing foreign investment in multi-brand retail.

Moreover, any international chain will need an Indian partner, as the multi-brand retail policy caps foreign direct investment (FDI) at 51 per cent, while cash-and-carry (wholesale) permits 100 per cent FDI.

Replying to questions on the company's exit plan, a cut in its workforce, a breakdown of talks with potential partner Bharti, and the sale of its assets in case the company left India, Carrefour regional director Franck Kenner told Business Standard, ''At this point, we will not be able to comment on anything.''

The group, which follows a lean business model in India, recently exited markets such as Malaysia, Singapore, Indonesia and Greece due to the economic slowdown and poor business.

Earlier, it was expected the French retailer would follow the UK's Tesco in entering the Indian multi-brand retail segment. Now, however, it might be preparing to cut the workforce by a fifth. The job cuts are likely to start at the mid-management level, a report said.