Bangalore : As Moscow faces a severe food shortage following sanctions from Western countries, representatives of Russia’s largest food retailer X5 Group will visit New Delhi next week to book big deals for groceries and agricultural products. to ensure adequate supply for its approximately 18,000 department stores.
Apart from basic food products such as tea, coffee, wine, rum, rice, ketchup, pasta and cornflakes, it is also exploring Indian suppliers for beauty products and apparel.
Earlier this week, company representatives participated in a virtual meet organized by Federation of Indian Export Organizations (FIEO) to shortlist the suppliers.
According to local reports, department stores in sanctions-hit Russia have run out of daily essentials such as sugar, pasta and rice.
The X5 may sign supply deals with Indian manufacturers and wholesalers for at least a year, the people said. It has requested an annual supply of 200,000 kg of tea and coffee, 8,000 tonnes of seafood, 2,000 tonnes of rice, 1.6 million female hygiene products, 150,000 cooking items, 80,000 units of cloth, 1.5 million bottles of shampoo and 5 million. Packs laundry detergent among other items.
Mint had reported that Russian retailers are looking for food and other essential supplies from India. “They have laid out requirements for a lot of products including food, textiles and beauty care products. The team will visit India next week to finalize deals with vendors after discussions during the virtual sensitization meet earlier this week. Their need is huge,” said Ajay Sahai, Director General and CEO of FIEO.
While agricultural and food products can be shipped without hassle, the West has banned textile and beauty products. “There is a ban on textiles and we have made it clear that we would like to talk only about food and agricultural items,” Sahai said.
The Russian Embassy in New Delhi had approached FIEO to facilitate a buyer-seller meeting.
While an India-Russia alternative payment mechanism using the rupee and ruble is still in the works, after the US-led West ousted some Russian banks from the SWIFT financial messaging system, there are opportunities for retailers to increase sales in India. Looking for Russian buyers are willing to pay in rubles, which will be converted into rupees and paid to Indian sellers, said a person privy to the discussion.
“The higher freight cost will be built into the final price quoted to Russian buyers, and they have no problem with it. This is a great opportunity for Indian buyers. The only concern at the moment is the availability of shipping lines.”
X5 operates in retail formats—convenience stores under the Pyaterochka brand, supermarkets under the Perekrestok brand and hypermarkets under the Karusel brand, as well as the Perekrestok.ru online market, and food delivery services.
The company’s global depository receipts are listed on the London Stock Exchange and the Moscow Stock Exchange.
Emailed queries to X5 Retail and the Russian Embassy did not elicit any response till press time.
According to some reports, a payment mechanism for an alternative to SWIFT has been worked out between Russia’s state-owned development bank VEB and the Reserve Bank of India for transactions in the local currency. Only one port in Georgia is currently operating for supplies to Russia.
State-owned Export Credit Guarantee Corp of India (ECGC) in February revised the cover category of shipments to Moscow from ‘open cover’ to ‘restricted covered category’ and increased the premium. Restrictive covers have revolving limits (generally valid for one year), and are typically approved on a case-to-case basis.
In FY21, India’s exports to Russia stood at $2.6 billion, while imports stood at $5.5 billion. Among the top exports, India sent pharma products worth $469 million and electrical machinery worth $301 million to Russia. Other items of export include tea and coffee, apparel and textiles.