“Carrefour [has] announced its intention to close its five cash and carry stores in India, where Carrefour has operated since 2010,” the statement said.
“The closure of Carrefour’s business in India will be effective at the end of September 2014. Until that time, the company will continue to be fully engaged with all its employees, suppliers, partners and customers to ensure a smooth transition.”
Under-performing markets
The French supermarket major—the world’s second-biggest retailer after Walmart—is in the process of leaving under-performing international markets in a bid to focus on dropping revenues at home.
Now with around 10,000 stores in 34 countries, Carrefour previously departed from markets including Greece, Colombia, Singapore and Malaysia to raise cash to defend key markets in western Europe, China and Brazil. It is not yet known if the company has found a buyer for its Indian assets.
Over the last five years, Carrefour has invested around Rs3bn (US$50.2m) in its Indian operation and seen a Rs2.3bn (US$38m) annual turnover, according to analyst estimates.
The move comes following a sweeping victory in May’s general election for the BJP party, a nationalistic party that is no fan of foreign investment. The Indian press has already speculated that the election result spurred Carrefour’s decision to quit the country, although this theory is yet to be commented on by the company.
"The barriers were laid down by the previous government and the new government only made it worse by opposing the policy," Devangshu Dutta, chief executive of retail consultancy Third Eyesight, told Reuters this week.
"So companies who do not want to lose money in the market have been left with very little choice but to either hold back or fold up," he said.
Dying breed
India’s US$500bn retail sector was opened up to foreign companies in 2012 by the outgoing Congress government amid a great deal of opposition by the BJP, who predicted the move would have an adverse effect on private stores.
However, these fears have yet to come to pass with Britain’s Tesco, which has announced plans to open stores in India, the only international supermarket chain still publicly showing an interest in the country’s consumer retail market.
Last year, Walmart bowed out of its partnership with local conglomerate Bharti and called off plans to open up retail stores. The company is now focusing on opening wholesale stores and recently launched an e-commerce venture.