Ikea Eyes Further Investment in India; Plans Unveiled for Expansion and Growth

FDT Bureau

Swedish furniture giant Ikea is reportedly considering further investment in India after utilizing its initial commitment of Rs10,500 crore made a decade ago upon entering the country. According to reports, the company began its retail operations in India with the launch of its first store in Hyderabad in August 2018. Currently, Ikea is working on projects in Delhi-NCR set to open in 2025, which will fulfill its investment commitment for the initial ten years.

The first investment has been allocated to projects in NCR, utilizing the Rs10,500 crore. Reportedly, they are exploring additional investments to enhance Ikea’s presence in India, expand business volumes and increase sourcing. Plans for the next phase of investment are being developed, and further announcements will be made in due course, suggested a report.

In 2013, the government approved Ikea’s Rs10,500 crore FDI proposal to establish 10 stores with related infrastructure within ten years. Additionally, Ikea had plans to open 15 more stores subsequently. Presently, 100 per cent FDI is allowed in single-brand retail trading via the automatic route. Ikea currently operates stores in Hyderabad, Mumbai and Bengaluru, and is investing approximately Rs7,000 crore to establish two stores in Gurugram and Noida in the National Capital Region (NCR).

As per reports, the decision on the scale of the next investment would be made by Ikea’s parent company, Ingka Group. However, the next investment round is expected to be substantial, considering India’s growth potential. That being said, Ikea is optimistic about India’s growth prospects, particularly as the country enters a decade of significant development. Ikea is now focusing on markets in the South and West regions with an omnichannel approach. While Ikea plans to expand to cities like Lucknow and Chandigarh in North India with upcoming stores in Delhi NCR, the company is also interested in Pune, Chennai and Kolkata.

Ikea is also working to increase sourcing from Indian markets for its global retail operations, with a focus on furniture and other sectors. The company aims to increase local sourcing and explore India’s potential to supply other Ikea markets. Ikea intends to boost sustainability and affordability for Indian consumers by sourcing locally and focusing on specific categories such as textiles, plastics, metals, handicrafts, and wood-based furniture. Currently, the Swedish company generates one-fourth of its sales in India from online platforms and offers doorstep delivery in 62 new markets across the country. According to RoC filings, Ikea India’s sales increased by 61 per cent to Rs 1,768 crore for the financial year ending on March 31, 2023, despite incurring a loss of Rs1,134 crore due to expansion in new markets and investments in infrastructure.

(Image for representational purpose only)