Galloping inflation is perhaps forcing IKEA to hasten its Indianisation programme as the company announced its plans to source more products locally to combat rising inflation. Also, by doing so the Swedish furniture group hopes to connect better with the country’s burgeoning middle class. IKEA sources about 25-27% of its products locally with five suppliers in Karnataka and aims to get at least half of its sourcing done locally in the long term.
Meanwhile, the company opened its fourth Indian store, biggest in India, in the Indian tech hub of Bengaluru in Karnataka on Wednesday, four years after it entered the Indian market. Spread over 12.2 acres, the 4,60,000 sq. ft. IKEA Nagasandra store will feature more than 7,000 well-designed home furnishing products along with over 65 beautifully designed room sets for ideas and inspirations at home.
As prices soar, the average Indian is becoming more conscious of spending on non-essential items. India’s retail inflation eased marginally in May, after touching an eight-year high of 7.79% in April, but remained above the central bank’s tolerance band for the fifth month in a row.
High import duty has always been a sore point for global corporates to operate in India, with import tax on furniture at 25%. “Import duty has an impact on prices and competition and it is not a fully open market but it is a part of doing business,” said a company’s spokesperson.