With India's huge population, economic expansion and rapidly developing middle-class, the Indian retail sector has long been viewed as a highly desirable prize for international retailers.

Nevertheless, establishing a presence in the market is no mean feat and the Indian government has imposed some considerable barriers to entry.

Foreign multi-brand retailers have long been barred from selling goods directly to Indian consumers.

To circumvent this restriction, the likes of Wal-Mart and Tesco have established cash-and-carry operations in the country, served as back-end logistics providers to a local partner and established consumer retail joint ventures with local retailers.

However, last month the government threw into question such enterprises when it moved to further tighten the rules governing FDI.

The corporate structure that has been followed by a number of multinationals in the country was potentially undermined when the government insisted that wholesale companies must not become dedicated back-end supply chain providers for an Indian retail partner.

The status of FDI in the country's retail sector has therefore been left in a state of flux, with lawyers pawing over the details to determine how the new regulations will be interpreted.

And, while the full implications of the new regulation remains to be seen, the potential costs for international retailers already operating in the market could be hefty.

In this context, the softy-softy approach that has been adopted by French retail giant Carrefour seems more than justified.

The world's second-largest retailer has been linked to a rumoured entry into India for years.

While the company has repeatedly confirmed that it is seeking “the right” local partner to establish a presence, it has also insisted that the move will not be a rushed one.

Reports that emerged this weekend that the company has signed an agreement with India's largest retailer, Future Group, may therefore have raised an eyebrow or two, coming hot on the heels of the legislative shake-up.

While Future told just-food today (4 May) that a deal is yet to be inked, on closer inspection the reported structure of the agreement could make a lot of sense for both parties.

According to the LiveMint report, which cited two unnamed sources, the franchise deal would see Future open 150-300 Carrefour-branded hypermarkets over the next five years.

While Future is already active in the hypermarket sector through its Big Bazaar outlets, the Carrefour stores would appeal to a slightly different demography – feeding the growing demand from India's young, affluent middle class consumers for foreign brand names.

Rather than risking cannibalisation, the introduction of this new high-end banner could therefore significantly expand Future's reach in the sector at a pace unachievable without Carrefour's global, instantly recognisable brand.

For its part, Carrefour would receive royalties from Future with minimal upfront investment and, therefore, risk.

With such a low-level of involvement from Carrefour – with the day-to-day operations in the hands of Future – it also seems likely that the partnership would not be hampered by further government restrictions, whatever turn the political climate takes.

Significantly, Carrefour would also prepare the ground for any future moves the group could be plotting in the country as and when the market opens up to FDI.

Assuming that Future shares Carrefour's vision for its stores in India and would project the 'right' corporate message accordingly, the move could help foster a greater brand awareness in the country at a time when the French group is unable to develop its own operations.

It would also help Carrefour forge closer links with a powerful local player, developing a relationship that could prove highly beneficial were the government to move in a more liberal direction in its policy on FDI.

Nevertheless, while there are some clear strategic benefits to such a deal, given the current unsettled regulatory framework, it would seem uncharacteristic of the strategy adopted by Carrefour since confirming interest in India if the group were to push ahead in the market in the near-term.

Rather, it seems probable that those expecting an indication of how Carrefour will proceed in India could be in for a lengthy wait.