Swedish home furnishings chain to double sourcing from the country
IKEA Group, the €30.1 billion revenue Swedish-based global home furnishings leader, will double its sourcing from India by 2020 from the present €315 million.
Sourcing products from India for the last 28 years to supply to global stores, the company wants to accelerate its ‘Make More in India’ initiative, which is in line with Narendra Modi Government’s ‘Make in India’ vision. At present, it works with around 50 suppliers engaging approximately 4,00,000 co-workers directly and indirectly.
Ikea’s other significant engagement is in funding livelihood projects with an eye on helping reduce child labour. It is working with women centric, cottage industries across 16 States. Approximately €175 million has been invested in buying products from such ventures and funding, a company spokesperson told BusinessLine .
Rs. 500-cr investment
To expand this, Ikea India is organising events in select cities to bring together local suppliers and firm up arrangements for its proposed India entry as well. After Mumbai and Bengaluru in January, the third meet was held in Hyderabad recently with 80 local suppliers.
The global furniture retail giant has identified Hyderabad to launch its India store operations. It has firmed up plans to buy the land it has sought and shown by the Government of Telangana close to the IT hub near Cyberabad. The The 3,50,000 sq ft store, to typically see a Rs. 500-crore investment, is in all likelihood to get the final nod from the top rung of the company in Sweden by end of June, he said.
Ikea Group is the first major single brand retailer to get FDI approval with an investment proposal of Rs.10,500 crore for 25 stores. Plans are to open several stores in Delhi/NCR, Hyderabad, Karnataka and Maharashtra. Globally, it has 361 stores in 45 countries.
The Hyderabad event organised with the State Government was to identify potential suppliers in Telangana in categories such as sofas, book shelves and mattresses as well as products made in new sustainable materials such as bamboo, mango, jute and other natural fibres.
Key market
Juvencio Maeztu, CEO of India operations, had met State Chief Minister K Chandrasekhara Rao in June 2014. In July, an MoU was signed with the Government. “Hyderabad is one of our prioritised markets, both for setting up retail stores and growing the sourcing chain”, he said in a statement.
Commissioner of Industries of Telangana, Jayesh R Ranjan, said Ikea would be part of the growth story of Telangana. The State Government is committed to extend its full support and also offers to create a special industrial zone for future IKEA suppliers as well as extending loans and subsidies. Business Line
