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Jan 25, 2012, 09.06 PM IST | Source: CNBC-TV18

Single-brand retail: IKEA wary of SME sourcing norms

For those of you planning on buying from an IKEA store in India, hold on. It seems that the global furnishing giant is not building on its India plans just yet. The reason? The definition of the term SMEs in the single-brand retail press note, reports CNBC-TV18s Rituparna Bhuyan.

For those of you planning on buying from an IKEA store in India, hold on. It seems that the global furnishing giant is not building on its India plans just yet. The reason? The definition of the term SMEs in the single-brand retail press note, reports CNBC-TV18s Rituparna Bhuyan.

The press note 1 of 2012 mandates that for investments above 51% in single-brand retail, foreign company will have to source 30% of its products from Indian SMEs.

SMEs have been defined as industries with a maximum of USD 1 million worth of investment.

IKEA has problems with this particular definition. In a written reply to CNBC-TV18s queries, IKEA told With respect to the 30% sourcing clause, it is mainly the definition of SMEs that is an obstacle to investment for the IKEA Group and needs to be reviewed. The definition of small industries as industries which have a total investment not exceeding USD 1 million is an obstacle"

But the company clarified that it has not put its India plans on hold and India remains a strong potential market.

CNBC-TV18 asked DIPP officials regarding these comments by IKEA. They have told that as of now the company has not approached the department. So, net-net, it could still take some time for the Swedish major to set shop in India.

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