Swedish home products retailer Ikea to withhold entry into India

Swedish home products retailer Ikea is withholding its planned entry into India although Asia's third-largest economy opened its doors  this month to foreign direct investment up to 100 per cent in single brand product retail.

Mikael Ohlsson, the CEO of Ikea, the world's biggest furniture retailer, told the  Financial Times that it will delay its entry into India as the Indian government's latest policy requires single-brand retailers to source 30-per cent of their goods from local small and medium-size companies.

Ohlsson said that although the change in policy was ''a very positive change, conditions applied to local sourcing were ''concerning'' and more easily met by food retailers than single-brand companies with established, global product ranges.

This month, the Indian government ratified a 24 November cabinet decision to raise the ownership limit to 100 per cent from 51 per cent for single- brand product retail, paving the way for foreign companies like Starbucks, Adidas and Ikea to open 100-per cent owned shops, but continued to block the entry of supermarket giants like Wal-Mart and Carrefour from its $400 billion retail market.

Last December, the government planned to allow in foreign supermarket chains to set shops, but later backtracked amid parliamentary opposition and protests from small shopkeepers.

Ohlsson said his company was seeking clarity on restrictions imposed on entry to India, ''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.''