Ikea Shelves India Expansion Plan

June 11, 2009
A rule preventing stores being 100% foreign owned was the reason

Swedish furniture company Ikea has scrapped plans to open new stores in India, blaming rules that ban outright foreign ownership of single brand retailers, the company said on June 11. Ikea spokeswoman Charlotte Lindgren said a rule preventing stores being 100% foreign owned was the reason behind the move.

"We have been having problems with the regulations in India so we took the decision to postpone our expansion because we want to have full ownership of our retail operations," Lindgren said, denying that the global economic slowdown had influenced the move.

Indian regulations cap foreign investment in single-brand retailers at 51%.

Ikea said India remained "a long term potential market" and would continue to lobby for the existing regulations to be changed.

"If and when changes are made to the FDI (foreign direct investment) regulations allowing 100% ownership of single brand retailers then Ikea will reconsider its position," the company said.

The company's comments came after India's Economic Times reported earlier on June 12 that the Swedish company's planned one-billion-dollar (713-million-euro) entry into the Indian market had been put on hold after talks with the government broke down.

Ikea announced in 2006 that it wanted to open its first store in India by 2011.

Copyright Agence France-Presse, 2009

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!