Retail giants' shopping bill to hit $10 bn

Wal-Mart, GAP and Target alone spend above $1 bn in sourcing products from India.

Leading global retail chains are expected to ramp up their purchases from India to $10 billion in three years from around $6 billion now.

According to industry estimates, the three largest retail buyers Wal-Mart, GAP and Target now account for more than $1 billion in sourcing from India.

"India's supplies to such large retailers will grow at more than 25 per cent per annum from 2005 onwards, when the multifibre arrangement is dismantled," said A Sakthivel, chairman, Apparel Export Promotion Council of India. His Tiruppur-based Rs 80 crore firm manufactures apparel for top-end US retailers like Vanity Fair and Ferrale.

Sourcing by large international chains like Wal-Mart, GAP, H&M and Target accounts for nearly 50 per cent of India's $12 billion apparel exports.

The German business-to-business retailer Metro AG, which entered the country last year, is already sourcing products worth $50 million from the country, and according to a company source, it plans to increase it up to $2 billion in the next two years. Metro currently sources a broad range of goods, including food products and textiles.

"Two years ago the size of our purchases from China was $50 million and now it has grown in excess of $2 billion. We will try and do the same in India as well," said a Metro official.

Wal-Mart, the world's largest retailer, buys goods worth $350-400 million from India. A senior Wal-Mart official in India said that although textiles and apparel contributed the bulk of its purchases, it was looking at increasing the supply of items like jewellery, steel products and handicrafts from the country.

J C Penney, the $15 billion high-end apparel retailer, had set up its buying office in India as early as 1992 but its sourcing is limited to around $150 million from the Indian region (which includes Bangladesh and Pakistan) because of quota restrictions.

"With the quota system set to disappear after 2005, we would want to make India one of our biggest buying destinations with purchases of nearly $700 million," said Adil Raza, head of JCPenney Purchasing Corporation in India. The company also purchases handicrafts worth $10 million a year from the region and hopes to take that up to $100 million by 2006.