In one of the biggest Foreign Direct Investment (FDI) initiatives, Swedish home furnishing major IKEA has proposed a whopping Rs. 10,500 crore (€1.5 billion) investment to set up 25 stores under the single brand retail category.
In a statement issued in New Delhi, the Commerce and Industry Ministry said the IKEA Group, which manufactures and sells home and office furnishing products, proposes to invest in single brand retail trading in India through a 100 per cent subsidiary. This would be the largest investment in the single-brand retailing ever since the government has allowed FDI in this sector in Jaunary this year.
Officials in the Ministry said the company has filed an application with the government through its adviser Titus and Co. Advocates. The proposal needs to be finally be approved by the Cabinet Committee on Economic Affairs (CCEA), as the proposal exceeds Rs. 1,200 crore. As per the proposal, IKEA would be investing Rs. 4,200 crore (€600 million) to open 10 stores in the first stage. The remaining Rs. 6,300 crore (€900 millilon) would used to open 15 more stores. The company would be selling products like furnitures, blankets, kitchen utensils, bathroom fittings, electrical equipment, tableware, cooking range, toys, leather articles, cosmetics, life style items, consumer electronics and gadgets.
The company has also proposed to set up restaurants, food mart, nursing home and publications under its brand name. This is the second proposal made to the government after the government hiked the FDI cap in single brand retail to 100 per cent from 51 per cent. Earlier the footwear and accessories player Pavers England has applied for a licence to operate on its own in India, envisaging an investment of Rs. 100 crore.
Keywords: IKEA, FDI, single-brand retail
This is both good news and bad. IKEA brings in value for money with
their furniture. They will also bring in the necessary infrastructure
for supply chain. On the con's how ever they are known to hire for
assembly type jobs which offer nothing more than minimum wage and not
much growth. While their furniture is great design, useful and value
for money most often it is made of cheap wood. IKEA entering India,
brings the country one step closer to global standards. Of course it
will if priced right could eliminate infiltration of Chinese not so
qualitative products.
We want business to happen in India but don't want money to leave India
(in case of FDI). Its like having best of both worlds. That is desirable
but does not happpen in India. For that to happen we need more entrepreneurs to come .... not the kind of Ambani ('buy and sell'
entrepreneur). We need more TATAs or many smaller of his kind. Till then
we have to do with Foreign companies since the help build the exchequer
whereas most of businessman don't pay tax.
Lets see how long this furniture company from Sweden will survive in
India when towns and cities in India re already full with such
shops.
Are you kidding? IKEA stuff looks nice, but quality???. Every chair
or table i have bought have not lasted more than a year. Among my Indian american friends there is running joke. Do you want IKEA type wife (very casual, leave if you want) or Indian wife.
This will not work in cost conscious India. Most people i know in India are used to have furniture (table,cots, teak swings) lasting generations.
They'll teach a lesson or 2 to our overpriced furniture shops. They got amazing stuffz. Most of the Ikea products in Sweden were made in China. It will be great if they procude / manufacture in India.
Yes, this is good news because it injects cash into the Indian economy. But please
don't say that IKEA is known for the quality of their products, because in the USA and
other parts of the world where IKEA is in business, poor and flimsy furniture is
synonymous with IKEA (kind of like Google is synonymous with looking something
up on the internet).
I am not sure if Jitendra Dutta has owned an IKEA product. Ikea is not known for quality products. In fact they are known for their "cheap quality" products. They don't use real wood for most (if not all) of their furniture and they use MDF. Having said that, the fit and finish of their furniture is good and it will also be cheaper than the furnitures available in India. Besides, it will bring in the concept of self assembled, modular furnitures into India. The closets cost an arm and a leg now a days. With Ikea, it will become more affordable. Even at international prices, they are cheaper than the price we pay in India. All in all it is a welcome change, if the government approves it.
Well, yes this is great... but for who ? To the people in India ?.. My
answer is Yes and No!
Yes: IKEA have good and effective design for less price. Durability if
okay. But most are NOT "Made in India".. just a few.
No: Many Indian factories, shops and workers/business people will lose
their jobs. Like always China has another indirect market open.
So, what do we need ? Good cost effective furniture at the cost of
lively hood of our own country men ?
People are people, they are not selfish or corrupt, but want to
survive. If that means buy products that are cheap, then its fine,
after all we are all used to cutting corners here and there. But
Govt., they are Not people, they are the leaders. they have the birds
eye view. They are responsible and should look out for us (people),
and protect us.
As far as consumer is concerned it is a good news. The real threat lies
in where will furniture be manufactured. (most of it is in China).
this makes the trade deficit more polarized.
what will happen to all the small furniture shops of India and to the
carpenters creed.
This is great news if it actually materializes! IKEA is known for value and quality of their products, they are enormously successful everywhere they set up shops. India needs to ensure that IKEA would source most of its items from Indian vendors including small and medium businesses and minimize and finally eliminate imports from China or elsewhere.
Great news but please ensure they do not list the products from China using this route. Then it would be a backdoor route for product dumping. Does the government have any rules related to the origin of the products these stores sell? There should be a certain limit..
Flimsy and useless products will soon flood the Indian markets. People will discover that IKEA doesn't manufacture durable products.
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