Ikea wants FDI rules relaxed

India’s tight investment rules restrict overseas retail firms to back-end wholesaling to

protect local, family-run stores which fear being driven out of business. However, Swedish giant Ikea has urged the government to relax the strict regulations and allow them to open its superstores in India. Ikea, which has annual global sales of around $30 billion, already has 10 stores in China and is looking at opening around five more in the next few years.

The furnishings chain, which sources 500 million euros in textiles and other goods from India annually, plans to boost that figure to one billion euros within three to four years. The Swedish superstore is known for its inexpensive yet stylish home furnishings. Ikea initiated activities in India in the year 2000. It had come close to setting up shop in India, but has never done it. Last year it shelved plans to open 25 stores across the country. As things stand today the only way that Ikea can trade in India is through a joint partnership where a 49 per cent stake of the is held by a local Indian firm.

Foreign retailers are seeking to develop new sales outlets in the face of saturated Western markets. India and China with populations of more than one billion loom large in their sights. Retailers like Ikea, Carrefour and Wal-Mart are pushing the Indian government to open up its retail sector.