“We have proposed furniture clusters at the Kandla port. IKEA wants 450 acres of land,” Road Transport, Highways and Shipping Minister Nitin Gadkari on the sidelines of an event to launch a joint study by IIM Calcutta-Transport Corporation of India on operational efficiency of freight transportation by road in India.
The retailer is ready to provide technology, know-how and expertise to the cluster and buy the entire finished product, Gadkari said.
“They are ready to buy the finished products… You bring wood, good designs and we will buy, they have said. What is happening in China, we can do it,” he added.
The catch is “IKEA will not invest, it will provide design and source from there”.
Currently, wood is sourced from Africa and other countries and then exported.
Once the deal is finalised, Gadkari sees the cost to be reduced by 50 per cent, which would enable India to compete with China.
The minister said Jalna in Maharashtra has got Rs 10,000 crore contracts under Sagarmala initiatives during the Maritime India summit. Jalna has 450 wood-cutting centres.
IKEA is scheduled to open its first store in India in Hyderabad in the second half of 2017 even as it scouts for more sites in Delhi-NCR, Mumbai and Bengaluru.
The company, which received Government approval in 2013 for its Rs 10,500-crore proposal to open retail stores under 100 per cent FDI, plans to open 25 by 2025 in nine Indian cities.
In July last year, the company had announced purchase of 13 acres close to the IT hub in Hyderabad’s HITEC city.
IKEA expects its stores in the country to be among “the most visited stores in the world” and hence, the company has prepared for it by planning bigger restaurants and more seating capacity to suit high visitation stores.
In November last year, IKEA had sought relaxation from the government for five years over mandatory 30 per cent local sourcing norms from opening of its first store in India rather than first investment.
At present, IKEA sources products worth euro 300 million for its global operations from India.