After setting up a store, IKEA could also open a production unit in India

IKEA’s first store in India is all set to open in the second half of next year, and it plans to open 25 such stores in 25 cities of India by 2025. This has also led the Swedish furniture retailer to consider setting up a production unit in the country so that it can fully tap the potential of 'big middle class' consumers here.

As per reports, it has already purchased land in Hyderabad and Mumbai where it would start retail operations, and aims to double sourcing of products for its global operations from India by 2020.

"It is important for us to set up our production (unit) in India," said IKEA Group President and CEO Peter Agnefjäll.

He also went ahead to explain the reason for a production facility in India, saying, "On one hand that would support the growth of the economy and secondly, what we do is that we sell products, which are inexpensive. You can not distribute these inexpensive products long distances because if you do that then you would ruin the margin of the product."

Agnefjall further said: "So it's important for us to go for the local production. If we have the right technology, right raw materials which is existing there then we can combine with the knowledge of IKEA and turn into a fantastic product.

"Then only, I think we can reach the big middle class and not the affluent few but the many people in India. There is enormous growth of the people of the middle class year by year and by 2025 it would look different from today," he added.

He was also asked about the total investments that IKEA thinks would go into the Indian market, to which he said that as per estimates, more than 1.5 billion euros would be invested in India for storage and distribution.

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