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Swedish furniture maker IKEA said it will hold product prices in India despite the hike in import duty on toys and furniture proposed in the budget.
“IKEA will not hike its product prices in India,” it said adding that the company has urged the government to re-consider the hike in import duty.
The import duty on furniture was hiked to 25 per cent from the current 20 per cent and tripled on toys to 60 per cent.
IKEA, which opened stores in 2018 in India, currently imports 75 per cent of its products. On the sidelines of Retail Leadership Summit 2020, Peter Betzel, Managing Director, IKEA, said that the company was disappointed with the decision.
“We are evaluating the impact. I am sure it will have an impact on our business. However, we will not increase our product prices in India.”
He further added that IKEA was in conversation with the government to relook its decision on the tariffs.
“Yes, we have meet the government several times. The government is very open and also asked to help in increasing local manufacturing. So, we are in ‘good dialogues’ with the government and I think that will continue,” he added.
Reports have suggested that the outbreak of Coronavirus has impacted the global supply chain for several brands. IKEA had shut all its 30 stores in China after the outbreak.
However, Betzel claimed that their supply chain has not been disrupted due to coronavirus. According to him, IKEA imports approximately 35 per cent of products from China.
He however added that it was making alternative plans in case it impacts the supply chain. “We need to see what is happening day by day. We try to have things on stock. No one can predict what will happen with the virus tomorrow or what its impact will be on supply. We all hope that they get it under control but what will be in a week or four weeks we need to adapt and take decisions then,” he explained.
Betzel had earlier said that IKEA’s parent company, Ingka, was looking at a few investments in manufacturing or raw materials in India. Speaking to BusinessLine , Betzel said that they would look at investing in raw materials like wood in India.
IKEA has retail parks abroad which have shopping centres and cinemas alongside their stores. Betzel said that they will be opening two such retail parks in Gurgaon.
On IKEA’s second store in Navi Mumbai, he said, “The store is set to open in summer 2020” without giving a definite timeline.
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