Government flaunts Carrefour's 'gratitude' letter on FDI in multi-brand retail

NEW DELHI: French hypermarket chain Carrefour's managing director Jean Noel Bironneau has written to commerce and industry minister Anand Sharma expressing "whole hearted gratitude"' to the government for allowing foreign direct investment in multi-brand retail, indicating the company's eagerness to invest in the country.

"We welcome this decision and express our whole hearted gratitude to Government of India for taking this great initiative," Bironneau said in the letter to Sharma on Friday, a fortnight after the government notified the Cabinet's decision to allow 51% foreign direct investment in multi-brand retail.

Bironneau congratulated the government on taking the `decisive step' and said that the company believed that this was a positive move and would benefit the Indian farmers and consumers in the long run.

Carrefour, the world's second largest retailer by sale after Walmart, already has a presence in India and runs two cash-and-carry stores -- one in Delhi opened two years back and another in Jaipur opened last year. India allowed 100% FDI in cash-and-carry way back in 1997 permitting foreign retailers to sell to wholesalers, but not to consumers.

"Carrefour MD's letter expressing gratitude to the government for allowing FDI in multi-brand retail is a clear indication that the company would want to invest soon. We expect proposals from Carrefour and other major retailers to come in over the next few months," a government official told ET.


Most foreign retail companies including Walmart, Carrefour and Tesco, who have been waiting in the wings, while the government took its time in developing "consensus'' for opening up the multi-brand sector, are now examining the fineprint of the FDI terms and conditions.

There are media reports about Carrefour wanting to rope in a senior retired bureaucrat as an adviser for this job.

Some foreign retailers, including Walmart, have complained of lack of clarity over issues such as whether existing investments in back-end cash & carry will be counted to meet the minimum investment obligations in front-end retail.

Commerce & industry minister Anand Sharma clarified that foreign investors have to bring in fresh investments of $100 million in multi-brand retail of which $50 million will have to be made in the back-end as the multi-brand FDI policy was a new one and cannot be merged with existing policies on cash-and-carry.

The mega retail chains, however, would be allowed to invest in existing Indian retail stores provided they do not flout the existing FDI rules that allow up to 51% foreign holding in any multi-brand venture.

This means that Carrefour will be allowed to invest in Kishore Biyani-owned Future Group's existing ventures, if it so wishes, provided its ownership doesn't go beyond 51% and it meets the minimum investment criteria.

Carrefour was said to be in talks with Future Group in the past, which may be revived now that the multi-brand sector has been finally opened to foreign investments.