Swedish home furnishings giant Ikea said yesterday it aimed to double the value of goods it sources from India as it pitched for New Delhi to open up the nation’s huge retail market to foreigners.
Ikea sources 500 million euros (US$655 million) in textiles and other goods from India and plans to boost that figure to 1 billion euros “within three to four years,” chief executive Mikael Ohlsson said.
Ikea, which shelved plans to enter India’s retail segment last year because New Delhi restricts foreign ownership of single-brand retailers to 51 percent, is still keen to open stores in the country, Ohlsson said.
India’s tight investment rules restrict overseas companies to “back-end” wholesaling — except for single-brand outlets such as Nokia or Reebok — to protect local, family-run stores, which fear being driven out of business.
Ohlsson, who was in India on a trip to inspect the company’s 125-million-euro South Asia development program helping children and women, urged the government to relax regulations, saying there was “room for all players.”
“We believe we can create employment — jobs in cities and outside cities, we can be part of transforming industry,” he said in an interview in New Delhi.
Ikea believes it can replicate in India its success in China and Russia, Ohlsson said.
Ohlsson met with Indian Commerce Minister Anand Sharma during his visit to press for changes in the country’s retail legislation.
“We had a good open debate about possible change,” he said.
Ikea sees huge potential in India’s burgeoning middle class, whose “wallet is still thin” but wants “good furniture at a good price,” Ohlsson said.
Ikea is one of a slew of international retailers that include France’s Carrefour and Wal-Mart of the US pushing the Indian government to open up its retail sector to serve consumers in the fast-growing economy.