The world's second largest retailer Carrefour on Tuesday said it will enter India's $330 billion retail market through the franchise route by 2009, for which it is talking to three potential local partners.

The French firm, which has already made a soft launch of its cash and carry business, will keep its identity separate from the retail venture to conform with Indian laws.

"We have incorporated two companies - Carrefour WC&C India Pvt Ltd for our wholesale cash and carry, and Carrefour Master Franchise Company Pvt Ltd for the retail business," Carrefour Group (India) managing director Herve Clec'h told PTI.

He said an agreement with the Indian partner for the franchise retail venture is expected to be signed in the second quarter of 2008 and the first store to be opened by 2009 - by when its cash and carry business will also attain full steam.

"Initially, we were talking to five Indian potential partners and now have zeroed in on three parties � a conglomerate, a retailer and a financial institution � from which we will choose one," Carrefour India Project general manager Gerard Freiszmuth said without naming them.

India, whose retail market is estimated to be of the size of $330 billion, does not allow foreign direct investment (FDI) in retail now. The country, however, allows multi-brand retailers to enter the market through franchise agreements, 51 per cent FDI in single-brand retail and 100 per cent FDI in cash and carry.

"We are entering after clearly understanding the law. There are no clever combinations... our management is not for this," Freiszmuth said.

Asked if Carrefour would be at a disadvantage given Wal-Mart's agreement with Bharti Enterprises for a presence in India, Freiszmuth said it would take generations for the Indian market to mature to the equivalent of the US market - implying that there ample opportunities.

"Everyday the Indian market is changing," he said. On the company's India plans, he said further down the line, mergers and acquisitions could be a part of its plan. "Even if the Indian law changes (to allow FDI), we will look to be a shareholder in the retail business."

Carrefour, which has a global sales of Euro 97 billion and employs 450,000 worldwide, will move into an office at Gurgaon that will have the capacity to seat 150 people.

The French giant, which has been sourcing garments in India since 1990s and has now added vegetables and dry fruits, said this business would continue in complement with the cash and carry venture.

The merchandising team for the cash and carry business arrived in India in September, Clec'h said, adding that three entities - master franchise, cash and carry and sourcing business - would remain independent.

On the planned investments and the number of stores, Clec'h said it was premature to talk about it and added that they were yet to identify clients for cash and carry business, which will look to supply to other retailers as well.

Asked what was holding them from reaching an agreement with local partners for front-end retail, he said: "Retailers have their own format and is difficult to team up with them because of competitive reasons; With financial institutions, they have money but no knowledge of retail business, while the conglomerates have a habit of making fast money.

"But investing in retail is a long-term game... we will compromise to an extent."