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Late last week, Carrefour announced it would open up shop in India this year. It's not a cakewalk to do business there, but the market potential is enormous.

By Matt Pillar, Editor In Chief, Retail Solutions Online/Integrated Solutions For Retailers

Why should you consider doing business in India? First, the Indian market is largely underserved by retail chains. According to the National Council of Applied Economics Research and World Bank, large chains comprise only 6% of the $450 billion Indian retail market; 80% of retailers there are small family-owned businesses. That's both an opportunity (already being seized by Marks & Spencer, Metro, Tesco, Wal-Mart, and now Carrefour) and a challenge. The challenge lies in Indian law that only allows foreign direct investment in the country's cash-and-carry or wholesale ventures. The restriction is driven by a powerful lobby of the country's millions of small shopkeepers. It took Carrefour seven years to strategize the right mix of partners to enable its foray into the market.

Next, for its part, the Indian economy is the second-fastest growing in the world. The country teems with 1.1 billion people; at 300 million its middle class alone matches the entirety of the U.S. population and grows at a rate of 2% annually. That's what's most appealing to grocers and general merchandisers the likes of those named above — they cater to the middle class, and the size of the middle class in India eclipses that of their respective countries.

Finally, even incomes in rural, agricultural areas of India have been growing for the past four years. This segment of the population accounts for well over half the country's durable and consumer goods sales. In other words, Mumbai, Delhi, and Bangalore aren't the only opportunities for retailing success there.

Is the fact that the world's mega-retailers have been able to crack India's restrictive foreign retail policies heartening for US-based small to midsize retailers? Number-one Walmart and number-two Carrefour had to work through the stipulation that they could only enter the Indian market through franchise arrangements with local retailers, and they can't own more than 51% in a single retail brand (with the exception of cash-and-carry ventures). Would that gauntlet be easier for smaller, less market share-threatening retailers to maneuver? Have you considered, attempted, succeeded, or failed at entering the burgeoning Indian retail market? I'd like to hear about it. E-mail me at matt.pillar@jamesonpublishing.com.