Tesco, Sainsbury Apply to Set Up Sourcing Centers in India

   By Anant Vijay Kala 
 

MUMBAI--British supermarket chains Tesco PLC (TSCO.LN) and Sainsbury have applied to Indian authorities to open sourcing centers in the country, Trade Minister Anand Sharma said Wednesday.

The applications were made during U.K. Prime Minsiter David Cameron's visit to India, Mr. Sharma told reporters on the sidelines of a conference. Mr. Cameron's visit is due to end Wednesday.

Tesco currently has an agreement in India to provide know-how about retail operations to Tata Group's Star Bazaar stores.

In September, India allowed foreigners to own up to 51% in its supermarkets, which sell multiple brands, opening the door to retailers such as Wal-Mart Stores Inc. (WMT). Previously, foreign companies could operate only wholesale businesses in the multibrand segment.

Such investments would be allowed on the condition that 30% of the inputs in case of multi-brand retail must be sourced from small and medium-sized local industries.

Mr. Sharma didn't give details of what kinds of products the two companies plan to source in India or the markets where they could be used.

He also said that India's merchandise exports would reach $300 billion-$305 billion this fiscal year ending March 31, falling far short of the $360 billion target the government had set out to achieve.

Data last week showed India's April-January exports totaled $239.7 billion.

January's data also showed exports during the month grew for the first time in nine months--by 0.8% to $25.5 billion--raising hopes that demand for Indian shipments could begin to revive in the coming months as economic conditions in the key U.S. and European markets show some signs of stabilizing.

Mr. Sharma said he is hopeful that February and March data will be positive, but didn't elaborate.

He also said that the government is concerned about the country's large trade deficit with China, its largest trading partner, and that Indian authorities have taken up the matter with Chinese officials.

India is looking to increase its software and pharmaceutical exports to its northern neighbor, he added.

Data from India's commerce ministry show Indian exports to China stood at about $18 billion in the last fiscal year ended March 2012. However, its imports were more than three times higher at about $57 billion, leading to the wide deficit.

Write to Anant Vijay Kala at [e-mail]