India must look at incentivising local production rather than penalising imports, IKEA Group CEO Jesper Brodin said.
The head of Swedish home furnishing major, which has opened its first store in India on August 09, said high import duties on items would only make customers pay the price as it does not necessarily translate into local manufacturing excellence.
“Our point of view is that it would be better to incentivise local production than to penalise imports,” Brodin said in an interaction with media.
He was responding to a query on key challenges faced by the company in India.
Listing import duties on the top of the list, Brodin said: “Because it will be the customers who pays for it, and not necessarily (it) drives excellence in production.”
He, however, said the company could understand the import tariffs, stating “a nation of the size and the development (stage) of India, you have to defend yourself in your development curve”.
Although the company has been sourcing items from India for nearly four decades, it has been mostly textiles related items.
With its first store set to open here, it is importing a host of items, including wooden products, to be sold in India.
IKEA has however said that one of its highlights in India would be offering affordable products, with over 1,000 items on offer at the store here priced at less than Rs 200.
Brodin also highlighted complexity of land rights and purchasing in India as one of the factors for a slow start here in the country.
“The complexity regarding land rights and purchasing land, obviously for a company like IKEA, that requires a certain size, can lead to slow start of the process,” he said.
When asked if frequent changes in policies, specially in the retail sector was a concern, Brodin said, I think you have to be open. Our business is long term. Of course, politics follow its own cycle.
“For me and for us, there is a logic to what India is doing. There’s a logic to the development of India and we would like to trust and believe that it would continue. We are not sleepless over it.”
He also said organised retail sector was almost non-existent in India when IKEA entered India and hence legislations related to the sector was abstract.
“I am confident that it will be sooner or later addressed,” he added.
