Carrefour to enter India as cash-carry

New Delhi: The ¤75 billion multinational retailer Carrefour is planning to enter India via the cash-and-carry route. It will initially be investing US$ 100 million and will start from the national capital region. This will be the second instance of a global retail giant’s cash-and-carry operations here after Germany’s Metro AG. The bulk of Metro’s business comes from hotels, caterers, retailers and traders. Cash-and-carry implies wholesale selling (business to business) and not direct sales to retail consumers, which is prohibited at the moment.

According to the existing guidelines on foreign investment, 51 per cent is permitted and that, too, only in single-brand retail. However, 100 per cent foreign investment is allowed in the cash-and-carry format. When contacted, a company spokesperson in France said Carrefour had no comments to offer at this stage. Globally, Carrefour has 120 cash-and-carry outlets. It already has a sourcing office in Gurgaon. Sources close to the Carrefour plan told Business Standard the retailer was keen to initially establish an extensive supply chain across the country using this route. Once the norms are eased, it will look at addressing the end consumer directly.

“Appointing a franchisee may be an easier option. However, the more tedious cash-and-carry route is a full-fledged investment, involving a far greater degree of control. It also provides an insight into pricing mechanisms and a better understanding of the market,” the source said. Carrefour has already begun scouting for land and has appointed Jones Lang LaSalle as its real estate consultant. Organised retail in India is estimated at $6 billion and is projected to grow at 20-25 per cent per annum. Other multi-branded global retailers like Wal-Mart and Tesco are eager to enter the country. Carrefour has a strong presence in China, among other countries. Just under 8 per cent of its annual sales come from Asia.