Carrefour to exit India business

From BBC

Carrefour has been exiting underperforming markets as part of a turnaround plan

Carrefour, one the world’s largest retail chains, is shutting its business in India less than four years after it opened its first store in the country.

It currently operates five cash and carry wholesale stores in India.

The French retailer has been exiting underperforming markets, including Singapore, Malaysia and Greece, under chief executive Georges Plassat’s three-year revival plan.

It has said it wants to focus on key markets in Europe, China and Brazil.

Opening up

India opened up its multi-brand retail sector to foreign firms in 2012.

But it has put pre-conditions, including those on local sourcing and infrastructure investment, and has also left the final decision on whether to allow foreign companies to open stores to individual state governments.

Many analysts have said the pre-conditions have deterred foreign companies from entering the sector.

So far, only one firm – the UK’s Tesco – has announced plans to open stores in the country.

The decision to open up the sector to foreign firms also faced political opposition at the time.

The Bharatiya Janta Party (BJP) – which has recently formed a new government in India – had opposed the move arguing that the arrival of big name supermarkets may hurt the small retailers in the country.

For more on this story go to: http://www.bbc.com/news/business-28205698

Tesco signs deal to enter India’s supermarket sector

From BBC

Tesco has signed a deal to become the first foreign supermarket to enter India’s £330bn ($500bn) retail sector.

The retailer has agreed a joint venture with Trent Hypermarket Limited (THL), a unit of India’s Tata Group which runs the country’s Star Bazaar chain.

Tesco will invest about £85m in the 50-50 deal, following Indian government approval.

Until two years ago, foreign retailers had been banned from investing in the country’s retail sector.

Under the deal, THL will operate 12 supermarkets under the Star Bazaar and Star Daily banners in southern and western regions of India.

Tesco, which is the world’s third largest retailer and the UK’s biggest, has had an agreement to supply merchandise and technical support to THL since 2008.

Rules relaxed

But it is now the first foreign firm to take a stake in an Indian retailer, 18 months after the country’s government opened up the sector to global supermarket chains.

International firms are now able to buy up to a 51% stake in multi-brand retailers, but the decision has led to much opposition in the country.

The move to relax the rules in September 2012 came after a similar decision, in November 2011, was scrapped following widespread protests.

Rules stipulating that foreign supermarkets had to source 30% of their products from local firms were eased in August 2013 amid fears the rule was blocking investment.

The requirement remains, but foreign firms now have five years to hit the 30% target, allowing them to import goods from overseas initially.

For more on this story go to: http://www.bbc.com/news/business-26686357