Ikea to make more in India, double local sourcing
The furniture retailer plans to buy goods worth as much as 630 million by 2020, up from 315 million currently
New Delhi: Ikea, the world’s largest furniture retailer, plans to double sourcing of home furnishing products from India by 2020, even as the company prepares to open its first store in Asia’s third largest economy.
The furniture retailer plans to buy goods worth as much as €630 million ( ₹ 4,830 crore today) by 2020 from €315 million currently, the company said on Wednesday.
To rope in more suppliers, the Swedish furniture is rolling out its “make more in India” initiative in line with Prime Minister Narendra Modi’s “Make in India” campaign that was launched in September this year, to spur indigenous manufacturing in the country, especially by large foreign companies.
The company is looking to grow its existing supplier base from India, a popular sourcing destination for textile and furnishing companies globally.
“We are looking for new suppliers who share our vision and values, are willing to grow with us, and become world-class suppliers. We believe that many suppliers will come from other segments who are looking to diversify their business,” said Sandeep Sanan, head of sourcing at Ikea South Asia, in a press statement released by the company.
As part of the “Make More in India” initiative, Ikea India will conduct seminars in Mumbai and Bengaluru in January, seeking participation from 100 potential suppliers.
The seminars will focus on enrolling new suppliers in categories such as textiles and rugs as well as for new home furnishing categories such as furniture, mattresses and sustainable materials such as bamboo and acacia, and also expand the number of suppliers for categories such as metal, plastics and lighting.
The move comes as the company seeks to strengthen its supplier base in the country, where it has promised to invest ₹ 10,500 crore to open large stores.
“The Ikea Group is positive to all government initiatives that simplify and make it easier to produce in and export products from India,” Sanan added.
Increasing local sourcing of products for Ikea from India is critical as part of a foreign direct investment (FDI) policy in the country that allows retailers to open stores on the condition that they ought to procure 30% of goods sold within the country from domestic manufacturers.
The Swedish furniture company has been sourcing products from India for the past 27 years, working with 48 suppliers.
Ikea India Pvt. Ltd is seeking to expand its authorized capital to ₹ 875 crore from the current ₹ 70 crore to establish its retail operations in the country, according to documents filed with the Registrar of Companies (RoC) in November.
The Swedish company has been in talks with various state governments to acquire land both for its stores as well as warehouses. The company is looking for suitable locations in the Delhi-NCR (National Capital Region), Mumbai, Bengaluru and Hyderabad.
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First Published:11 Dec 2014, 12:52 AM IST
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