French retail chain Carrefour decides to go slow in India

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May 13: 2013: The Euro 80 billion French retail chain Carrefour which is second largest in the world after Walmart has decided to go slow in India because of the uncertainties surrounding the FDI policy for multi brand retail. Carrefour presently runs a fully-owned cash-and-carry business, with four wholesale outlets – one each in Delhi, Meerut, Jaipur and Agra in India.

Carrefour has shown reluctance citing that some guidelines issued by Government of India on FDI lacks clarity and are tough to comply with. The Union Cabinet had cleared the new FDI policy last September which allowed upto 51 per cent FDI in multi brand retail.

After the move by the government, many global players like Walmart and IKEA have expressed their interest in setting up base in India. IKEA coincidentally has got the nod to set up stores in India. Though high level of interest has been expressed by major players in Indian retail market which is estimated at USD 500 billion, it has failed to bring in proposals to a larger extent.

Some of the proposals of the government which is making companies like Carrefour to go on the back foot are 30 per cent mandatory sourcing from small and medium enterprises, not allowing FDI in e-commerce, state wise approvals and 50 per cent investment in back end infra. Though Government of India has indicated that commerce ministry would be issuing a comprehensive clarification, it remains to be seen if companies like Carrefour can be wooed to invest in India.

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