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Ikea prefers 'less detailed' sourcing regulations
14
Jun '16
Courtesy: Ikea
Courtesy: Ikea
Amid the raging debate over 30 per cent local sourcing conditions for single brand foreign firms to open retail stores in India, Swedish home furnishing major Ikea has said although it is better to have "less detailed regulations" but it will abide by the rules on local sourcing and do “whatever of course to fulfil that.”

Ikea Group President and CEO Peter Agnefjall told PTI in the Swedish town of Almhult that the company welcomed the steps India has taken to “enable retailers like us to establish ourselves... you have 30 per cent rule for sourcing. We will do whatever of course to fulfil that. We see many opportunities that will be good for Ikea and good for India."

But he conceded that Ikea would have preferred less detailed regulations. "I think, in a way that at the end of day, it's better for the world for more freedom of trade we can have, and with less detailed regulations, because then the business would end up where you actually have the best preconditions to do so," he said.

Elaborating his point, Agnefjall said: "For instance for textiles, which is super strong in India and it's not so good in Sweden, it's better that we actually do it (source) in India for more countries and we will do something else in Sweden."

Nonetheless, he reiterated that there was rethinking on 30 per cent local sourcing condition for operating its retail chain in India: "regulations are what regulations are, and we have accepted them and we will make sure that we will fulfil the requirements set up by the Indian government."

Agnefjall said Ikea has agreed that five years from store opening in India it would fulfil requirements and "that's the target set on which we are working upon".

He said initially it was "little bit unclear as where does it count from store opening or from the time you establish the company".

"For us it is important it goes from store opening because we have a very long lead time as we are securing the land, which needs to be prepared, stoned and have building permit etc. before you can construct the store," Agnefjall said.

Ikea received government approval in 2013 for its Rs 10,500 crore proposal to open retail stores under 100 per cent FDI. It has plans to open 25 stores by 2025 in nine Indian cities. (SH)

Fibre2Fashion News Desk – India

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