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Ikea not to pass on duty hike impact on imported furniture to customers

Betzel said the company has a long-term commitment to the country and has been working with suppliers in the country for more than 30 years.

February 27, 2020 / 08:44 PM IST
IKEA store (REUTERS/Petar Kujundzic)

IKEA store (REUTERS/Petar Kujundzic)

Swedish furniture and home accessories retailer Ikea on Thursday said though the government's recent move to hike customs duty on imported furniture will have an impact on its business, it will not pass on the increase to customers. In the Union Budget 2020 announced on February 1, Finance Minister Nirmala Sitharaman announced to increase customs duty on imported furniture from the present 20 per cent to 25 per cent. The move was aimed to protect the interest of the MSME segment.

Ikea opened its first store in the country in Hyderabad in August 2018.

"We are evaluating the impact (of hike in custom duty). But, I am sure it will have an impact. So, we don't like and we are disappointed," Ikea India's managing director Peter Betzel told reporters on the sidelines of Retail Leadership Summit.

He said the company has a long-term commitment to the country and has been working with suppliers in the country for more than 30 years.

Betzel said the company needs forest wood to manufacture products and flatland technique but that do not exist in the country.


"This is not the way we are looking at how we can develop. We would like to have a reliable and stable business environment and move to future," he said.

He further said the Ikea's focus is on affordable products and a hike in custom duty can pose a challenge in offering such low priced products.

"There could be a challenge when it comes to affordability. But we are not looking at increasing our prices," he said.

The company met the government and expressed its views on the hike in custom duty.

"We are in good dialogues with the government and I think that will continue but the fact is we don't like (hike in custom duty).

On the impact of outbreak coronavisrus on the company, Betzel said, "Supply chain has not been disrupted due to the coroavirus, but we are making plans in case it happens."

Talking about the expansion plan in the country, Betzel said the Navi Mumbai store will open in the next three to four months.

"In Mumbai, we will open our big store in summer. In the coming 12 months, we will add two smaller formats of Ikea in the city. The online channel in Mumbai is already there. So, in Mumbai we will have a multi-channel format," he said.

He also said the company plans to target 100 million customers by 2022.
first published: Feb 27, 2020 08:40 pm
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