French retail giant Carrefour has put on hold its expansion plan for wholesale stores in India due to the global downturn, a report said Monday.
The report in the Business Standard newspaper came as many foreign investors have been put off India due to a sharply slowing economy and a string of government corruption scandals.
Carrefour, Europe’s biggest retailer, is “rationalising” its store expansion plans in India due to a worsening global economic climate, the newspaper said, citing unnamed sources. A company spokesman had no comment on the report.
Carrefour – which opened its first cash-and-carry store in India in 2010 – planned to open an outlet in the western city of Pune, but “that is now on the backburner,” the newspaper said, quoting two sources.
Some of the other store openings it had planned for 2012, widely expected to be an aggressive launch year for the chain in India, might also be delayed, the sources told the newspaper.
Six months after finalising as many as 12 real estate leases across India, the company has put on hold hiring for its planned outlets, the sources said.
Carrefour, the world’s second-largest retailer after US giant Wal-Mart, operates two wholesale stores in India, catering to food firms, restaurants and retailers.
The group said in its most recent annual report it intended to maintain strict financial discipline in response to a challenging business environment.
It said it wanted to continue to focus on emerging markets but preferred countries such as China, Brazil and Indonesia.
India bans multibrand retailers from directly selling to consumers because of fears they could undermine local retailers. However, it allows foreign retailers selling one brand to operate stores.
Sweden’s IKEA last month announced plans to open 25 of its stores in India as it seeks new markets for its flat-pack furnishings in what the government saw as a boost to its efforts to restore global investor confidence in the country.
A dispute over India’s strict product sourcing rules has clouded IKEA’s entry plans, but government officials say New Delhi may relax the policy as part of a wide-ranging foreign investment review, the Times of India reported on Monday.