BackIkea prepared to buy Telangana govt land for Hyderabad store
Firm is examining land sites in NCR, Maharashtra and Karnataka as part of its first phase of retail expansion in India
Premium
Hyderabad: Ikea, the world’s largest furniture retailer, is prepared to buy land from the Telangana government to open a shop in Hyderabad, while it evaluates cities in Karnataka, Maharashtra and the national capital region to sell its popular ready-to-assemble furniture.
This signals the Swedish firm’s readiness to disburse part of its promised ₹ 10,500 crore investment into India, where it seeks to open 25 stores over the next decade. The company is yet to decide on the location of the first Ikea store in the country.
“As of now, a final decision has not been taken. Over the next months, we will go through the due process with a likely outcome by this summer," an Ikea spokesperson said in response to an emailed questionnaire. “Ikea may launch several stores in the identified cities at the same time."
Ikea is examining land sites in the national capital region (NCR), Maharashtra and Karnataka as part of its first phase of retail expansion in India, said the spokesperson. It is the company’s “priority to find the right store locations at the right price, with metro connection and easy access to public transport", the spokesperson said.
The company’s Indian arm, Ikea India Pvt. Ltd, wrote to Telangana State Industrial Infrastructure Corp. (TSIIC) on 9 March, expressing interest to buy a plot in Raidurg, not far from the Hi-Tec City and Gachibowli, where a number of technology companies have offices. The old Bombay highway connecting Hyderabad and Mumbai passes through Raidurg.
“With this request, Ikea India formally initiated the land acquisition process," Jayesh Ranjan, vice-chairman and managing director of TSIIC, said in a statement on Tuesday.
The news comes close to two years after the Swedish furniture chain got approval to invest in India from the Foreign Investment Promotion Board under the finance ministry, in one of the largest single investments to be made by a single-brand foreign retailer in India.
A typical Ikea store requires 7-8 acres and takes about 12-18 months to be built from scratch. Each store costs an estimated ₹ 500 crore, Ikea India chief executive Juvencio Maeztu said at a retail summit in September.
The company recently signed an agreement with the Maharashtra government to set up stores in the state. Earlier in September, the retailer signed an agreement with the Karnataka government, promising to invest ₹ 500 crore in the state.
The request for land allotment in Hyderabad comes after the Swedish firm signed an agreement with the Telangana government in October.
“An important step in the process was the memorandum of understanding signed between Ikea India and the government of Telengana and Karnataka to facilitate its retail expansion process through a single-window clearance and simplified processes," the company spokesperson said.
To boost the local economy and help local suppliers become part of Ikea’s global supply chain, the Telangana government has offered to establish an exclusive Ikea supplier park.
The company, Ranjan said, was also evaluating an opportunity to set up a hand-knotted carpet project in Warangal district in Telangana.
Ikea will also organize a ‘Make More in India’ event in Hyderabad in May, in parallel to the land purchase process, to strengthen the local supplier base in the home furnishings category.
Ikea has been sourcing products like carpets and lights from the Indian market for its global retail operations for over three decades now. The chain plans to double its sourcing from the India market by 2020.
Leiden-headquartered IKEA is the world’s largest furniture retailer and operates 361 stores across the globe in countries such as Sweden, the US and China. In 2013, the company did a business of €30.1 billion in retail sales, with over 820 million annual visits to its stores.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
