Swedish supermarket chain Rusta sets up direct sourcing operations in India1 min read . Updated: 15 Apr 2013, 05:33 PM IST
The company will buy finished products worth `200 crore from the country in the next three years
New Delhi: Swedish supermarket chain Rusta AB has set up direct sourcing operations in India and will buy finished products worth ₹ 200 crore from the country in the next three years.
India’s foreign direct investment (FDI) policy for retailers requires them to source a minimum of 30% of their goods sold globally from India. Fulfilment of the clause by companies such as Rusta could be a possible step towards setting up retail operations in India.
Rusta sells products such as carpets, home furnishings, paints, utensils and electronic goods through it’s branded stores. Its retail operations are presently restricted to Sweden, where it runs 67 stores.
Rusta, with a $400 million annual turnover, already has been buying products such as carpets, textiles and metal parts from India for over a decade through vendors.
“Our sourcing form India is just under $10 million currently, but we will looking at at least four or five times that number in the next few years," chief executive Goran Westerberg in a interview on Monday, adding that India has a “big cost advantage" when it comes to direct sourcing.
The company’s chairman Bengt-Olov Forsell didn’t rule out setting up stores in India. “We are starting our direct sourcing project now. As for (retail operations in) India, in the future it can be possible but it will not be the first step," he said.
Forsell added that the company is looking at expanding in other Scandanavian countries.
Another Swedish firm, Ikea, the world’s largest furniture retailer, has got approval from India’s foreign investment promotion board and the finance ministry for its ₹ 10,500 crore FDI proposal to open retail stores. Ikea applied to open stores in the country after the government relaxed its mandatory 30% sourcing norms.
Currently, Rusta sources more than 80% of its products from Europe and Asia. The company expects India to be it’s second largest sourcing hub in three years as it doubles its network of 15 vendors to 30 to source products such as textiles, jute and carpets.