Exports to retail chains likely to touch $25bn

Officials said the idea was to ensure that at least 10 large retailers sourced their products from India.

"Over the next two-three years, we expect that $20-25 billion exports will be to these retail chains, which are trying to develop markets like India and Mexico to reduce their dependence on Chinese exporters," said an official. The total procurement by retail chains from India is estimated to be below $3 billion at present.

A high-level team from Wal-Mart US and Germany are in India to place orders for leather goods and footwear.

Apart from meeting government officials, the team is holding consultations with 23 large footwear manufacturers in Agra, Jalandhar, Karnal, Chennai and Ambur.

The Council for Leather Exports estimates that the $250 billion retail chain will place orders for footwear worth $100 million.

At present, nearly 90 per cent of Wal-Mart's $1.6 billion procurement is from China, and Indian exports to the company are estimated at $6 million a year.

The government is targeting to get Wal-Mart to double its sourcing from India to $2 billion over the next two years.

At present, the retail chain mainly procures textiles and handicrafts from India through a large buying office in Bangalore.

Officials said Wal-Mart was one of the starting points in the government's plans to attract retail chains to procure from India.

The government has initiated talks with other large stores in the US and the UK so that they can focus more on India.

Some retail chains like Target, Pier 1, Ikea, Kmart, J C Penny and Home Depot have set up buying offices, or tied up with buying agencies on a commission basis to source handicrafts and textile items.

Target's wholly-owned subsidiary, Associated Merchandising Corporation, is doing a bulk of the buying for the retail major, while others like J C Penny have set up their own offices.

Similarly, Pier 1 is doing a majority of its business through Exim International, while others are depending on local buying houses like Illuminations and Two's Company.

Given the large volume of business, the retail majors also procure directly from Indian exporters.

Some companies like K-Mart have drastically reduced their sourcing from India following financial problems in the US.

Officials said with large retail firms using India as a sourcing hub, export growth fluctuations would also reduce. Exporters, however, said with small capacities, they might not be able to meet the demands of the retail majors.