MUMBAI – Swedish retailer IKEA has applied to invest a total of $1.2 billion to open 25 stores in India, India’s commerce ministry said Friday. IKEA plans to initially invest €600 million, followed by an additional €900 million to create a wholly owned subsidiary in India. The commerce ministry said Friday that IKEA had discussed its concerns with Indian officials and found suitable answers, leading to the decision to invest. IKEA CEO Mikael Ohlsson and Indian commerce minister Anand Sharma met in St. Petersburg, Russia on Friday to seal the deal.
What this means:
Both Starbucks and Ikea had long been on the edge of plunging into the Indian consumer market. Starbucks now expect its first stores to open in Q3 2012 and now the Swedish home furnishings company has taken the plunge. This is an indication that major Western brands consider India as a must-have market and have overcome any regulatory skittishness.
BTW, Anand Sharma, India’s commerce minister is a rising star in politics there. He is eloquent and adroit in both Western and Indian ways. He was also the leader who licensed the hit song from Slumdog Millionaire for his political party’s electoral campaign during the last major national polls in India (and it helped the Congress party and its coaliton partners to build their appeal with less affluent voters)
June 23, 2012 No Comments
If you are Ikea or Starbucks and you wish to open stores in India, the government currently requires you to find a a local investment partner who would own 49 percent of the India business. Companies ranging from Reebok to McDonalds have entered the India retail market under these terms but many others have held back. This quarter there is news that India is seriously considering permitting 100 per cent foreign direct investment in single-brand retail.
India’s Commerce minister Anand Sharma said that IKEA had asked the government to hike FDI limit in single-brand retail. “IKEA sources almost 30 per cent of its products from India. It will create jobs in India. The government is considering it.”
Note that this does not affect “multi-brand retail” such as Wal-mart, Tesco or Best Buy. It is also unclear if the change considered in a one-time exception for Ikea, if anyone sourcing from India will be granted the same terms or if there is a general rollback to permit 100 percent foreign investment in all single-brand retail.
December 14, 2010 No Comments
The new location of the Bharat Diamond Bourse extends over 20 acres in Mumbai’s Bandra Kurla Complex. The bourse’s eight nine-story towers hold 2,500 offices, and the BDB reports that 2,275 have already been allotted to diamond companies, over 900 of which are official bourse members. The total space at the Bourse exceeds 1.6 million square feet making it the largest diamond trading location in the world, according to the Financial Times. It was designed by architect Balakrishna Doshi and cost $200 million.
The diamond trade has operated mainly from Panchratna building and Prasad Chambers in the old, crowded Opera House area in south Mumbai. Most traders are expected to vacate these locations by January 2011.
The market moved to this new location last weekend over the Hindu holiday of Dusherra and was inaugurated by India’s Commerce and Industry Minister Anand Sharma.
India processes the largest volume of diamonds in the world, primarily in the Surat area of Gujarat, north of Mumbai.
October 19, 2010 No Comments
American investors should well be aware of the emerging economies growing rapidly on the continent of Africa. Indian industry has already put into action a collaborative effort with the national government to develop strategies toward competing with China and European nations for capturing these business growth opportunities, particularly in East Africa.
India’s Commerce and Industry Minister Anand Sharma accompanied a delegation representing 187 Indian companies to “Namaskar Africa,” meetings held October. 14-15 in Nairobi, Kenya. This event involves a series of opportunities promoting India-Africa business networking organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).
Part of the strategy has Sharma meeting with the top Kenya government representatives – President Mwai Kibaki and Prime Minister Raila Odinga. Additionally, FICCI President Rajan Bharti Mittal, vice chairman for Bharti Enterprises, leads the Indian business delegation that has expressed a strong interest toward developing telecom business opportunities in Africa.
India currently experiences bilateral trade of $30 billion throughout Africa. Efforts are underway to expand trade into East Africa where trade revenue is much lower at $4 billion. The countries with representatives meeting with Indian counterparts include Uganda, Ethiopia, Rwanda, Kenya and Seychelles.
A challenge toward successfully competing has brought together both industry and government leaders in India in order to devise a plan that will “level” the field. In a study released by FICCI, one strong competition challenge presents itself because Chinese companies are government-owned with far greater capital at hand for investment than any privately owned Indian companies. According to the report India is attempting to counter the offers from Europe and China by extending credit lines to African companies. “This will help source capital goods from India,” Mitra said in the report.
Africa has experienced 5.4 percent economic growth throughout the past decade and the outlook is rapidly improving. The FICCI report further states that: “For the first time in over three decades, a large number of African countries have begun to show sustained economic growth at the rates that are similar to the rest of the developing world and exceed that of most of the developed countries. The study discovered several areas of opportunity for Indian companies in addition to telecom including healthcare and pharmaceuticals, road and railway construction, general construction, power and mining.
October 17, 2010 No Comments