Ikea eyes India as key sourcing hub amid global trade shifts
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Global trade wars have pushed companies to speed up the diversification of their supply chains and India will be key to Ikea's sourcing strategy where it is expanding beyond textiles to build supply capabilities in plastic, metals, and furniture, said Patrik Antoni, CEO at the Swedish retailer's India unit, who took charge earlier this month.While exporting products (largely textiles) from India to the US would mean higher retail prices for American consumers, in India, the expansion of local sourcing would allow Ikea to shore up its overall exports from the market as well as reduce prices for local consumers. Ikea did not comment on whether it would shift sourcing for the US from India to other markets - Europe is the company's biggest supply region, followed by Asia, and most of what Ikea sells in the US is manufactured in other countries."Ikea has been exporting from India for close to five decades...with more regionalisation of supplies, India should probably have an opportunity. When Ikea talks about sourcing...it's always with an ambition to export," Antoni told TOI in an interview.India is staring at a 50% tariff on US exports, putting it at a huge disadvantage over other Asian peers such as Bangladesh and Vietnam, which have been tariffed at a lower rate. Country retail manager and chief sustainability officer for Ikea India , Susanne Pulverer, said the announcement of the additional 25% penalty happened just last week, and she is hoping trade will not be disrupted much by tariff and non-tariff barriers going ahead.As Ikea looks to tap into a growing middle class in India, which, helped by higher disposable incomes, is becoming more discerning, the company is expanding its retail footprint in the country with the launch of its first store in New Delhi on Wednesday. For Antoni, the priority will be to step up India expansion and make pricing more affordable for consumers by widening local sourcing. "I see only opportunities for us in India, it's our time," Antoni said, hinting at more store launches in the country in the coming months. Ikea India has set a target of taking its local sourcing to 50% by 2030, which it said is on track. Currently, Ikea's brick-and-mortar stores in the region are only limited to Mumbai, Bengaluru, Hyderabad, and now New Delhi. It reaches more markets through its online stores.(With TOI inputs)
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