Ikea, one of the single-brand retailers expected to be among the first to set foot in India, is putting its plans on hold, citing government policies. 

The Swedish retailer says it will withhold launch plans until government policy becomes more favourable.

Ikea wants to establish wholly-owned stores in India, but the government wants to enforce a 30 per cent local sourcing condition on such approvals.

That, says Ikea CEO Mikael Ohlsson, is hard to meet by global companies with established product ranges sourced from different parts of the world. 

“We need to see what (the restrictions) will mean for us. We are patient because the conditions need to be right. In this sector, when everything seems to be okay, then we will be in,” said Ohlsson.

He proposed a ‘grace period’ should be given to international retailers who have fixed product ranges before reaching the sourcing targets.

Thorough market analysis is what Ikea known for. It takes five years for the retailer to decide before investing in one particular country.

“We have always been cautious. Now we will take a step-by-step investment in existing stores,” Ohlsson said.

In other parts of Asia, Ikea is accelerating its presence in China with three store openings per year. During the financial year 2011, Ikea’s sales hiked to 6.9 per cent to €24.7 billion (US$31.8 billion).

GB