Ikea seeks time to comply with India’s local sourcing norms
12 Feb 2015
Swedish furniture and home accessories maker Ikea is seeking changes in India's sourcing rules for single-brand retail.
The global retailer has asked the Department of Industrial Policy & Promotion (DIPP) to defer its 30-per cent local sourcing rules to the opening of its first store in the country, rather than dating it form its first entry into the market.
Ikea India chief Juvencio Maeztu met DIPP secretary Amitabh Kant and other officials of the commerce ministry on Wednesday on plans to increase sourcing from India.
The world's largest furniture retailer, with revenues of close to €29.3 billion, currently sources €150 million worth of goods from India and hopes to double this amount by 2020.
The Swedish firm has been sourcing products from India for close to three decades, and already has 48 suppliers and recently met with another 170 potential suppliers in Mumbai and Bangalore.
''We have shared our plans (with the government) to make more in India. We will increase our supplier base,'' Maeztu told reporters after the meeting.
An Ikea spokesperson said the firm would be meeting vendors in Hyderabad soon, adding that the idea was to access new categories. Ikea has been sourcing mostly textiles from India but is looking to broaden the base to include metals, plastic, lighting, wood and bamboo.
The Swedish firm typically has 'captive' suppliers catering exclusively for it needs.
Ikea, a single-brand retailer, is yet to set up shop in India although it has committed to an investment of close to $1.95 billion (Rs10,500 crore) over a period of time and plans to open 25 stores across the country.
The firm has approval for 100 per cent foreign direct investment, but Indian norms decree that for any proposal beyond 51 per cent, sourcing of 30 percent of the value of goods should be from India, ''preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors''.
