NEW DELHI, May 03, 2014 (AFP) - Carrefour, the world's second largest retailer, is working on a plan to exit India, media reports said Saturday, amid political uncertainty about the future of multi-brand retail in the South Asian giant.
The reports in the Times of India and Business Standard and other dailies come as the opposition Bharatiya Janata Party (BJP), tipped to win India's marathon general election which winds up in mid-May, declared it opposes allowing foreign direct investment in multi-brand retail.
Indian newspapers quoted unnamed sources in the France-based company as saying Carrefour had been working on an exit strategy for two weeks.
Carrefour did not answer telephone calls from AFP, but Business Standard newspaper quoted the retailer's regional director Franck Kenner as saying: "At this point, we will not be able to comment on anything."
The Indian newspapers said Carrefour's plans to leave the country come after talks to sell its five wholesale stores to Indian tycoon Sunil Bharti Mittal's retail group failed.
The reports said there had been several senior level exits from Carrefour India already, and that the company saw little hope of the next Indian government allowing foreign chains to set up multi-brand outlets in the country.
The BJP announced in its manifesto it will not allow FDI in multi-brand retail, while promising to push foreign investment in other sectors of the economy.
Carrefour had been expected to set up supermarkets in India after the Congress-led national government in 2012 allowed foreign stores to launch 51-percent-owned joint ventures in the country they had eyed for years as a potentially lucrative market.
But after the new FDI in retail rules were passed by the Congress government, protests erupted among shopkeepers and labourers who feared a loss of jobs and the collapse of small family-run stores.
The retail sector landscape remains dominated by traditional family-owned shops and small grocery stores.
The central government has left it to each state to decide whether foreign retailers can set up shop - but enthusiasm has been muted.
The northwestern desert state of Rajasthan, which had a Congress government, reversed its policy of allowing FDI in multi-brand retail after the BJP came to power.
One of the few foreign retailers to commit to India recently is Britain's Tesco, which has declared it will invest in India since the Congress government relaxed the FDI rules. Tesco has struck a deal with India's giant conglomerate Tata to invest in a dozen stores in India.
Another is Swedish giant Ikea, which plans to open 25 stores as part of a wider push into emerging markets.
But while foreign supermarkets hold back from India, domestic chains such as Future Group and Aditya Birla Retail are rapidly expanding.
The growth of the domestic chains underlines the potential of a big-spending middle-class - expected to cross 250 million people by 2015, consultancy McKinsey estimates.
In March, Carrefour reported a rise in profit and said its effort to turn around its French operations were starting to show results.
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