Ikea looks to enter India, plans $1.9 billion investment

HTT Staff -- Home Textiles Today, 6/26/2012 8:25:04 AM

New Delhi - International home furnishings retailer Ikea has submitted a formal application to the Indian government for permission to invest $1.9 billion and build 25 stores in the country.
The Indian government announced Ikea's plans on Friday after ceo Mikael Ohlsson met with Indian Commerce Minister Anand Sharma at a conference in St. Petersburg, Russia.
In its application, Ikea proposed two stages of investment, an initial 600 million euro stage followed by a later infusion of 900 million euros, an Indian Commerce Ministry spokesman said.
Ikea indicated its investment will be made over 15 to 20 years.
The Indian Commerce Ministry did not provide a timetable for when it would respond to Ikea's application.
Ikea's planned arrival in India was made possible by a policy change in January that allows single-brand retailers to own 100% of their Indian units, up from the previous 51%. India requires that Ikea source 30% of its inventory from small-scale local industries. The mandate will likely prevent the furniture source from opening for business in the next few years.
"Ikea had certain reservations about sourcing norms, which were discussed with the Department of Industrial Policy and Promotion officials; suitable answers of which were provided leading to the decision to invest," according to a statement from the Indian government.
Ikea operates 298 stores world-wide. The retaler sources textiles, carpets, ceramics and other goods from 70 suppliers and 1,400 sub-suppliers in India, the company said.