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Ikea to invest €1.5 billion in India stores

Ikea to invest €1.5 billion in India stores

Published: 22 Jun 2012 17:46 GMT+02:00
Updated: 22 Jun 2012 17:46 GMT+02:00

Swedish furniture giant Ikea plans to invest a total of €1.5 billion ($1.9 billion) in building a chain of 25 retail outlets in India, according to an Indian government statement.

An initial investment of €600 million will be followed by a further injection of €900 million, the statement said, without providing a timeframe.

Ikea has no existing stores in India, which at the beginning of this year allowed foreign companies to own 100 percent of "single-brand" retail ventures, up from an earlier cap of 51 percent.

The planned investment in India was confirmed during a meeting Thursday between Ikea CEO Mikael Ohlsson and Indian Trade Minister Anand Sharma in Saint Petersburg in Russia, the government statement said.

It comes at a time when foreign corporate confidence in Asia's third largest economy is low, due to slowing growth, new restrictive tax policies and a perception of government paralysis in enacting further reforms.

Several press reports put the investment timeframe at 15 to 20 years, with the Press Trust of India saying 10 stores would be opened in the first stage, followed by another 15 outlets.

Ikea had reportedly been worried about sourcing norms in India which require foreign retail firms to source at least 30 percent of their products from local companies.

AFP/The Local (news@thelocal.se)

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Your comments about this article

18:43 June 22, 2012 by Samuel Nemalladinne
Welcome Welcome, to the sheer madness... a.k.a India... we needed you, it was Walmart last year, now you, come DOMINATE us, things going back to colonization mode.. lolzzz
19:13 June 22, 2012 by Fernandis
India is already colonized in the hands of its corrupt politicians since more than 800 million Indians earn just 0.4 USD per day, ....a terrible figure. Definitely Ikea'll create more jobs for the poor ppl.GOOD NEWS!
19:52 June 22, 2012 by Freelife
Ikea products are quite expensive for average Indians.

However, it would be a real challenge for Ikea to sell in the Indian market.
04:30 June 23, 2012 by embil
Well, I hope it works out. and benefits Sweden in the long term.
21:10 June 23, 2012 by Navras
@ Freelife

Purchasing power is measured in terms of one's currency.

Indians don't need to spend the same amount of money to live.

The salary,wages and cost of manufacturing will be 2-3times cheaper in India.

For e.g. One can buy 1 loaf of bread for 3 SEK in India,1 cup of tea/coffee for 1/2 SEK .

India is big country and it has immense potential for big companies. Volvo,Ericsson,Tetra pek,ABB,H&M are some of most successful companies in india.

This investment by IKEA is win win for india and sweden.

Ikea will not only sell made in India stuffs to indian people, but also hire thousands of people; export ikea Indian manufactured stuffs to world as it does in china.

India needs Ikea,Walmart...Rather than selling wheat,rice,spices to sweden; It would be more successful allowing these retail chains to invest and sell processed goods .Walmart in china is one the biggest chinese exporter..

Moreover middlemen in india who runs those family owned business, pay no tax; extract more profit , hoard and have no supply chain systems.

Ikea will indirectly help to create an ecosystem of small companies. Many other indian companies who are selling substandard products will have to fight for the market.
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