IKEA to invest Rs 10,500 crore in India

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Spacescreamer

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IKEA, world's largest furniture maker, to invest Rs 10,500 crore in India​
NEW DELHI: Swedish furniture home accessories IKEA has decided to enter India with a Euros 1.5 billion (around Rs 10,500 crore) investment in a single-brand retail venture.


In the first phase it plans to set up 25 stores with an investment of Euros 600 million ( around Rs 4,200 crore) in opening 25 stores. Sources in the commerce and industry ministry said that the company has already sought government permission to set up a 100% Indian venture and has also promised to increase its sourcing from the country.

The decision to invest was communicated by IKEA CEO & President M Ohlsson during a meeting with commerce and industry minister Anand Sharma in St. Petersburg on Friday.

IKEA joins Pavers London in a small list of companies that have so far opted to set up a wholly-owned single brand venture. Earlier, only 51% FDI was permitted in this segment.

In these stores companies are permitted to stock goods from one brand only. 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 - 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.

Sharma's team is trying hard to dilute the sourcing requirement and mandate that the procurement can be done from any Indian company, not necessarily from a small unit.

The news from IKEA is sure to boost investor sentiment at a time when global players are wary of India in the wake of policy flip flops in recent months.

The government, however, contests that. After his meeting with Ohlson, Sharma said: "Despite the problems in the global economy and recent lowering of the rating outlook investor confidence in India remains robust."​
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?dOuBtFiRe? said:
So true guys. But can't help drool over the models of IKEA. That's for sure.
Lets see how this turns up.
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True that. IKEA is really good store for furnishing the house. In fact if they provide all services like planning as well, small time companies will not be able sustain much. Like Asian Paints started they own system where they help you plan the colors and also send across people to accomplish the job and their work is actually very good (personal experience).
 
Good. Less protectionism is good for the country. If local sourcing guidelines are not imposed too much, then IKEA might bring us better furniture.
 
This is certainly awesome news! Smaller groups such as Style Spa(Gautier previously), Damro and the likes will take a hit. IKEA needs to match the pricing though. Had been to a couple of IKEA outlets in DXB/AUH and fell in love with some of the DIY furniture there. Some folks complain about the durability though.
 
^ Yup durability is sometimes an issue. This is mostly due to their designs for most furniture where you have to assemble and screw in stuff together yourself. These designs will usually be less durable then something you get made from a carpenter.

But, Ikea is really awesome nonetheless. I remember exploring their huuuuuugee outlets a few times when I was a kid. You can easily spend a few hours inside. :P
 
i would rather buy solid wood and get a carpenter make it , but i guess ikea has its advantages for lots of other people
 
To put things into perspective, the investment is planned over a period of 15-20 years.
So don't hope on them having a massive impact anytime soon.
 
i dont think branded furniture do have much market in India, but it might increase in coming days as Indian middle class has started getting richer :D
 
Well @being smart, that can't be true. Pple do get more money, but there are necessities that take up even more money.
Atleast IKEA in India might be good as the local manufacturers will get more designs. I love DIY stuff and IKEA is king in that area. This will make local wallas to up their ante, which is really good for us.
The trouble is this deal should not left hanging by a thread like the Walmart deal.
 
^ True. There's a long way before we even see an Ikea outlet nearby. Hopefully it won't be like the Walmart case.

Being.smart said:
i dont think branded furniture do have much market in India, but it might increase in coming days as Indian middle class has started getting richer :D
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And so is the cost of living rising too. :|
 
Foreign investment is needed for the economy to recover... Unless someone is living in a bubble like North Korea, everything is global now... 57 to a dollar now :( Really sad state
 
IKEA was is not keen to work with any players to enter here.

They were being called from long.But they were straight 100% shareholding or they wont come.
Now the window for that might be open hence this news coming out.
 
MAGNeT said:
IKEA was is not keen to work with any players to enter here.

They were being called from long.But they were straight 100% shareholding or they wont come.
Now the window for that might be open hence this news coming out.
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Good that they stuck to their stand and did not bow before the stupid government. Now with dollar rate going up and rupee falling and economy doing bad, government will be forced to allow foreign players to enter India which should be good for consumers IMO.
 
?dOuBtFiRe? said:
ronnie_gogs why depend on someone when we can solve it ourselves. Everyone knows what is wrong with this country.
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No it cannot be solved by ourselves... Corruption and scams is a major issue but sticking to mindless stop everything foreign will only send investment to a different country... I mean how many of us even work for companies who have no dealing with foreign countries... Companies get paid in dollars... Domestic market is there but someway or the other its always linked to a global economy....
 
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