IKEA India not to hike prices of low-end furniture products
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Swedish furniture giant IKEA Sunday said it would not raise the prices of low-end furniture and furnishing products if the company costs increase due to Centre’s recent hike in customs duty on some furnishing items to curb imports of non-essential goods.
“For now, we have not seen any repercussions, but if there is continuation of costs due to hike in customs duties on furniture and furnishing items, then at some point of time we would have to pass it (burden) on to customers, but we may do it on higher-end products, not lower-end,” Patrik Antoni, Deputy Country Manager said.
“So, customers can still be hopeful,” he said.
Patrik said IKEA is a global company and it would appreciate global trade, but would not be happy with trade barriers such as customs tariff or import duties.
He also said trade barriers will only affect ‘ease of doing business,’ which will in the long run affect customers.
The Central Government had on September 26 hiked customs duties on as many as 19 items, including jet fuel, air conditioners and refrigerators, with an aim to curb imports of non-essential goods.
IKEA imports most of the products it sells, and many are covered by the latest customs duty hike which includes tableware, kitchenware and household items made of plastic and travel bags, among others.
The total import bill on account of shipment of such items into the country last fiscal was Rs 86,000 crore.
Curbing non-essential imports was part of the five-pronged steps announced by the government to check widening current account deficit and capital outflows.
IKEA is planning to invest nearly Rs 3,000 crore in the next three years to open three fulfillment centres (packing warehouses) in Mumbai, Bengaluru and Delhi.
The company would open the centres as an omni-channelling brand with large IKEA stores, city centre stores and online presence.
IKEA is set to open its second store in Mumbai later this year and would hold a ground-breaking ceremony on October 11 in Bengaluru.
By 2025, there would be over 25 stores across cities such as Ahmedabad, Surat, Pune, Chennai and Kolkata with both online and offline approaches.
Questions & Answers
Q.Which specific product categories might see price increases at IKEA India if costs continue to rise?
Which specific product categories might see price increases at IKEA India if costs continue to rise?
If increased costs persist due to higher customs duties, IKEA India indicated they might pass the burden onto customers. This would specifically affect higher-end furniture and furnishing products, not low-end items.
Q.What is IKEA's general stance on trade barriers like customs tariffs?
What is IKEA's general stance on trade barriers like customs tariffs?
IKEA, as a global company, appreciates global trade and expressed dissatisfaction with trade barriers. They believe such measures, including customs tariffs or import duties, negatively affect the ease of doing business.
Q.What is IKEA's planned investment for fulfilment centres in India?
What is IKEA's planned investment for fulfilment centres in India?
IKEA plans to invest approximately Rs 3,000 crore over the next three years. This investment will be used to open three fulfilment centres, which are packing warehouses, located in Mumbai, Bengaluru, and Delhi.
Q.What is the government's aim in hiking customs duties on certain items?
What is the government's aim in hiking customs duties on certain items?
The Central Government increased customs duties on 19 items to curb imports of non-essential goods. This action is part of a broader strategy to check the widening current account deficit and capital outflows.
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