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Covid impact: IKEA delays foray into wood market

Forum Gandhi Mumbai | Updated on December 16, 2020

Peter Betzel, CEO, IKEA India   -  BUSINESS LINE

IKEA India’s plans to enter in the wood market have been delayed because of the Covid-19 pandemic, said, top officials.

Peter Betzel, MD, IKEA India, had earlier said that IKEA’s parent company, Ingka, was looking at a few investments in manufacturing or raw materials in India. Earlier this year, on the sidelines of a retail event in Mumbai, Betzel had told BusinessLine that it had plans to invest in the wood market in India.

During a recent infraction Per Hornell, Market and Expansion Manager, IKEA India, said that as sustainability remains its top priority for the Indian market, entering the wood market is definitely something IKEA is looking at. “These plans continue to develop and now we are progressing with them,” he said.

Also read: IKEA to invest ₹6,000 crore for expansion in Maharashtra

To promote Make in India, customs duties on over 50 products in each consignment of wooden furniture, tableware, kitchenware, and toys, among other products were increased by Finance Minister Nirmala Sitharaman. Currently, the Swedish retailer currently imports about 75 per cent of its products.

Concern over higher duty

Peter had said that it was “disappointing” that the customs duty had been hiked and that IKEA would speak with the Centre on the same. However, it looks like conversations on both ends haven’t yearned a solution so far.

Hornell said that there are multiple initiatives on local sourcing being introduced by the government, “currently, we are relying on Indian suppliers to buy textiles and wooden products.”

IKEA has 50+ suppliers in India, engaging 45,000+ direct co-workers and approximately 400,000 co-workers in its extended supply chain.

Also read: IKEA concerned on import duty hike, but will hold prices

However, investment in the wood market seems to have taken a backseat as other projects become the central priority for the furniture brand. “In the context of Covid, physical meetings have become next to nil, which delays our plans as these projects aren’t the top of our priority compared to others,” he said. “IKEA Hyderabad store completed more than two years in India. We are today online in Mumbai, Pune, and Hyderabad.”

Its Navi Mumbai store is planned to open on December 18 to the public. Two smaller stores will also open in Mumbai during 2021.

Published on December 16, 2020

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