IKEA Eyes Additional Investment in India Following ₹10,500-Crore Commitment Fulfillment

Swedish furniture giant IKEA is gearing up for its next phase of investment in India, having fulfilled its initial commitment of ₹10,500 crore made a decade ago upon entering the country. The announcement was made by Susanne Pulverer, CEO of IKEA India, who revealed that the company is currently working on projects in Delhi-NCR, set to open in 2025, which will complete its committed 10-year investment.

Pulverer stated, "With that, we have exhausted the ₹10,500 crore and we are looking at the next level of investment to further build IKEA presence in India, to expand volumes and increase sourcing." The plans for the next round of investment are in the making, with details to be announced when ready.

In 2013, the Indian government approved IKEA's ₹10,500 crore FDI proposal for setting up 10 stores with allied infrastructure within a decade. Subsequently, IKEA had plans to open 15 more stores. Currently, 100% foreign direct investment is allowed in single-brand retail trading through the automatic route.

IKEA presently operates stores in Hyderabad, Mumbai, and Bengaluru and is investing around ₹7,000 crore to enter the National Capital Region with two stores in Gurugram and Noida. The decision regarding the scale of the next tranche of investment will be taken by IKEA's parent company, Ingka Group.

Pulverer hinted that the upcoming round of investment is expected to be "big and bold," aligning with the growth potential of India. She expressed confidence in the Indian market, citing the dynamic nature of the market and the increasing trend of young people upgrading their homes.

As part of its strategy, IKEA is focusing on the South and West regions of India through an omnichannel approach. While expanding to other cities beyond Delhi-NCR is under consideration, Pulverer mentioned that Pune, Chennai, and Kolkata are of interest, but plans for these locations will be revealed step by step.

IKEA is also working to increase sourcing from Indian markets for its global retail operations, emphasizing the potential for growth in sectors such as furniture. Pulverer highlighted the importance of sustainability and affordability for Indian consumers and outlined categories like textiles, plastics, metals, handicrafts, and bulky furniture as areas with growth potential.

IKEA India's sales reportedly increased by 61% to ₹1,768 crore for the financial year ending on March 31, 2023, according to RoC filings. However, the company reported a loss of ₹1,134 crore, attributed to expansion into new markets and infrastructure investments.

HBL