|IKEA firm on India plans despite delays|
|Tuesday, 10 July 2012 10:47|
IKEA , the Swedish international home products company that designs and sells ready-to-assemble furniture, has reportedly said that the Company was firm on its plans to set up operations in India, and was willing to wait until the government clarifies its final stance on sourcing clause. The furniture retailer had asked the Government of India to tweak clause requiring sourcing 30% of the value of goods sold in India from small and medium local firms having capital investments below Rs 5.5 crore. IKEA has asked for larger suppliers to be qualified as small, since the SMEs would outgrow the stipulated valuation once they became regular suppliers and became competitive medium to large set-ups. The retailer also wants the compliance of this term to be calculated over a cumulative period of 10 years and not annually. The Department of Industrial Policy and Promotion (DIPP) has begun discussions with other ministries, including the Ministry of Small and Medium Enterprises (MSME), to ease the sourcing clause. The government is concerned that the restrictive policy environment was hurting India's image. Post the opening of single brand FDI, only two brands, UK’s footwear retailer Pavers and IKEA, have shown interest in entering the country. The government is seeking IKEA's June 22 investment announcement as a significant commitment by a foreign investor, hoping it will act as a cue for other global retailers.