French supermarket group Carrefour is reportedly nearing an agreement with India's largest retailer, Pantaloon Retail.

The French retailer has been looking for a partnership in India for years and in June last year was said to be preparing to take a stake in Future Fashion Merchandise, a Pantaloon subsidy created following the restructuring of its retail operations.

The Economic Times reported today (19 January) that the two companies were now "close to deal" that would soon be formally announced.

A spokesperson for Carrefour, however, declined to comment on the reports and added: "Carrefour is looking for a partnership in India to open shops. It is certainly something we are interested in."

Rules on foreign direct investment in India prohibit foreign companies from owning multi-brand retail outlets, forcing international conglomerates to forge partnerships with local retailers.

Carrefour has previously signalled its intention to set up a cash and carry wholesale chain in India, which is allowed under FDI regulations.

A tie-up would follow similar alliances between India's Bharti Group and US Wal-Mart and the Indian tea-to-steel Tata Group and UK retailer Tesco.

The Carrefour franchises would be aimed at "affluent" customers in cities, the newspaper said.