French Retail Major Carrefour Plans To Exit India

French Retail Major Carrefour Plans To Exit IndiaE-commerce segment of India is passing through tough times. Initially many e-commerce entrepreneurs started their initiative but they failed to sustain themselves in the competitive times. Most of the small e-commerce projects and websites have already been closed. Even the bigger players like Flipkart, Myntra, etc are facing regulatory heats.

The legal risks for websites companies developing e-commerce websites in India have also increased significantly. Similarly, entrepreneurs dealing with the fields like encryption, cloud computing, m-health, telemedicine, online pharmacies, Bitcoins exchanges, adult merchandise, online travel, online gaming including online poker, etc are not complying with techno legal requirements of Indian laws. Investing in such legally risky ventures without complying with Indian laws and regulations is not a viable strategy

Although the Commerce and Industry Ministry of India favours 100 Per Cent foreign direct investment (FDI) in B2C e-commerce sector yet this is a distant dream as on date. With no hope for the FDI in multi-brand retail segment in India and top level executives quitting the company, French retail major, Carrefour, the world’s second largest retailer, is said to be preparing to exit India. (See Update: 08-05-2014 below for contrary view)

The company was in talks with Bharti Group, after the latter broke its joint venture partnership with American retail giant Walmart. However, talks to sell Carrefour’s five wholesale stores based in Delhi, Jaipur, Bangalore, Meerut and Agra, to Sunil Mittal’s Bharti Group are said to have failed.

This is a first multi-brand retail casualty after the government left the decision to allow foreign retailers to the state governments, while allowing 51 percent investment in the sector. With the BJP and several regional parties announcing their opposition to FDI in retail, overseas players have not much hope left. Now the BJP has announced in its manifesto that it will not allow FDI in multi-brand retail, while promising to push foreign investment in other sectors of the economy.

Update: 08-05-2014

Carrefour India’s Managing Director Jean Noel Bironneau has refuted the media reports. Speaking to employees, he asked them to ignore rumours and continue work as usual. Carrefour India’s current business is operating wholly-owned wholesale venture through cash-and-carry retailing in which 100 percent foreign ownership is allowed. So the media reports of its exit from India seem to be exaggeration of the facts and situation.