In 2013, Ikea received government approval for a Rs 10,500 crore investment to build a supply chain infrastructure and open 25 stores across the country by 2025, one of the largest investment approvals for brick-and-mortar retailing in India.
World's largest furniture seller Ikea has expressed concerns that the government's import duty hike could push up costs and hurt business sentiment.
According to a report in The Economic Times, Ikea said that company is still gauging the impact and would not be able to comment on prices. “Trade barriers such as import duties are against ideas of a global economy and ease of doing business and will lead to higher costs in India, which is not customer friendly,” Patrik Antoni, Ikea Deputy Country Manager said.
In 2013, Ikea received government approval for a Rs 10,500 crore investment to build a supply chain infrastructure and open 25 stores across the country by 2025. This has been one of the largest foreign investment approvals for brick-and-mortar retailing in India. With Ikea's debut in Hyderabad last August, the opening day caused traffic jams around their store as 40,000 potential customers showed up for the first day.
Ikea plans to invest Rs 1,000 crore per store including land and construction costs. Apart from Hyderabad, Ikea has also invested in land in Mumbai, Gurgaon and Bengaluru.
“Everyday we strive to cut unnecessary costs in our supply chain to achieve our goals of offering affordable home furnishing products,” Antoni told ET.
Most of the company's products including tableware, kitchenware, plastic items and travels bags, are imported. All of which are covered under the import duty hike announced on Wednesday.The move to raise customs duties comes as the rupee has been depreciating against the dollar. From 0.6 percent in FY17, India's current account widened to 1.9 percent of GDP in FY18 and is expect to grow further to 2.8 percent this year. Rising crude prices, interest rate increases by the US Federal Reserve and a global trade war has proved to be disastrous to emerging economies with higher current account deficits resulting in falling currency values. India's rupee has fallen 13 percent to dollar since January.