Ikea in June asked India for permission to launch retail operations in the South Asian nation, promising to invest $1.9 billion over the coming years — part of a broader push into emerging markets including China and Russia.
“Once our application is approved we will develop a solid plan for the establishment of Ikea stores for many years to come, generating investments and new employment,” group chief executive Mikael Ohlsson said in a statement.
Ikea said it filed the final document this week in connection with its application, adding it saw India an important market for the flat-pack furnishings group which has been sourcing goods from the country for 25 years.
“We will continue to increase our sourcing in India from both existing and new suppliers,” Ohlsson said.
Ikea’s move into India was spurred by a government decision at the start of the year allowing foreign companies to own 100 percent of “single-brand” retail ventures, up from an earlier cap of 51 percent.
The government last month cleared the entry of multi-brand foreign retailers into the Indian market as part of a blitz of financial reforms ending years of policy paralysis.
India has agreed “in principle” to give Ikea seven years to meet guidelines stipulating foreign, single-brand retailers sell products made from 30 percent locally sourced content instead of an initially proposed one year, local media has reported.
The sourcing stipulation is part of efforts by the left-leaning government to defuse populist political opposition to the entry of big foreign retailers in a country where small mom-and-pop stores dominate.
Ikea’s request to enter India has been hailed by the government as a sign that global investor confidence in the country is still strong despite a sharply slowing economy, a slew of corruption scandals and heavy-handed bureaucracy.
The retailer sees huge potential in India’s burgeoning middle class whose “wallet is still thin” but who want “inexpensive but nice home furnishings”, Ohlsson has said.