IKEA to enter India, invest 1.5 bn euros in stores

In yet, Govt’s FDI policy has badly destructive in the market, the world’s largest flatpack furniture and accessories maker, IKEA plans to enter Indian market, the Asia’s third-largest economy.

IKEA’s decision came up after settling a meeting between the company’s CEO and India’s trade minister in Russia and Indian govt itself announced it that Swedish company is opening it stores in India.

According to source report, the company targeting urban middle class demanding for international brands and lifestyle products, said it would invest 1.5 billion euros to open 25 stores in Indian market after initially balking at India’s sourcing requirements.

However, it had also made debate with the DIPP (Department of Industrial Policy and Promotion) officials on Friday over its reservations on the sourcing policy, raising its sourcing to $1 billion in coming years, as per Government statement, source said.

Announcing move of FDI, Govt. official source said that IKEA will initially invest 600 million euros and a further sum of up to 900 million. While IKEA has no stores in India, but it said to open 25 stores and its investment will be made over 15 to 20 years.

“These investment estimates have been drawn up based on our experience in countries like China and Russia,” IKEA spokeswoman Malin Pettersson Beckeman told reporters.

Moreover the company’s investment over India would not boost the domestic market growth, but do with Prime Minister Manmohan Singh’s govt. that in favour to allow in foreign supermarket operators in December while FDI policy had been exited.

Recent IKEA’s move to enter Indian market hopes to hit the right signal to the efficiency of supply chains in India, bringing global supermarket such as Wal-Mart Stores Inc (WMT.N) and Carrefour SA (CARR.PA).

Meanwhile, the govt. now seem to forcing the international investors to put keen interest in FDI, improving the India’s economy that has been hitting worsely from nine years by wrong political reforms.

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