The famous Swedish furniture and home accessories major IKEA is ready to invest Rs 10,500 crore in India. Yesterday they sought government approval to invest in a single-brand retail ventures.
In the first phase, it
plans to set up 25 stores with an investment of Rs 4,200 crore. It will
subsequently pump in the remaining Rs 6,300 crore in the wholly-owned Indian
entity that will also undertake manufacturing work and set up various restaurants,
cafes, food markets, nursing rooms and publications.
“IKEA has reaffirmed
its commitment to India and also promised to step up sourcing for its global
operations,” commerce and industry minister Anand Sharma said after his meeting
with the company’s global CEO & president M Ohisson in St Petersburg.
The company is also
planning to double sourcing for its global operations to around $1 billion by
2016, the honorable minister added.
The Swedish firm is
among a handful of firms which have so far filled applications to set up 100%
single brand retail stores after the government increased the FDI limit from
51% nearly six months ago or so.
In these store
companies are permitted to stock goods from one brand, which is used globally.
The entry also comes with the stipulation that at least 30% of the products
have to be sourced from Indian micro, small and medium enterprises, which was a
major area of concern for IKEA until recently.
In fact IKEA was
expected to be among the first entrants, but the sourcing clause delayed its
announcement to happen. The company already works with 70 suppliers and 1,450
sub-suppliers, including many small industries, but still has worries over
meeting the mandatory requirements.
“They have been in
touch with officers in the industry department. They had certain clarification
and permission has been sought only after the concerns were addressed,” the
minister concluded.