1. Market Data
June 9, 2016

Furniture retailer Ikea to set up production facility in India

Swedish furniture retailer Ikea plans to establish a production facility in India, where it is set to open its first store next year.

Swedish furniture retailer Ikea plans to establish a production facility in India, where it is set to open its first store next year.

The plany will enable the retailer to tap growing middle-class consumer market in the country.

The firm has acquired land in Hyderabad and Mumbai where it will open stores in the second half of next year.

It plans to double the sourcing of products from India to cater to its international operations in the next four years.

"It is important for us to set up our production unit in India."

Ikea president and chief executive officer Peter Agnefjäll told Press Trust of India: "It is important for us to set up our production unit in India."

"You can not distribute these inexpensive products over long distances because if you do, you would ruin the margin of the product.

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"So, it’s important to go for local production. If we have the right technology, right raw materials which exist there, we can combine with the knowledge of IKEA and turn into a fantastic product.

"Then only can we think of reaching the big middle class, not the affluent few but the many people in India. There is enormous growth of the middle class year by year and by 2025, it would look different from today."

The retailer plans to invest more than €1.5bn on stores and distribution.

It plans to open 25 stores in nine cities by 2025.