Swedish home furnishings major IKEA which has committed for Rs 12,500 crore investment in India, has sought relaxation from the government for five years over mandatory 30 per cent local sourcing norms from opening of its first store in India, the company in a statement said.
Ikea said it needs some time “to build a sustainable and long term sourcing solutions” to source raw material, find local entrepreneurs and to create industrial set ups.
Ikea India country communications manager Patrik Antoni said,” “To facilitate this sustainable way of doing business, we have asked that the five-year time span for the 30 per cent local sourcing should be calculated from the first Ikea store opening rather than first investment.”
“To do this we will have to manufacture a large part of our range in India and over time we believe that it will be considerably more than the 30 per cent local sourcing demand stated in our FDI approval,” he said.
It takes time to develop new suppliers and sustainable production capacities where some categories do not even exist today in India, Antoni said.
“Ikea would want to source more than 30 per cent, but to reach that goal within five years of its first investment, which was made in 2013, will be a challenge as the first Ikea store has not yet opened,” he added.
