Ikea and Other Single-Brand Retailers Prepare for India

Young residents of India, meet the Billy bookcase. The ubiquitous Billy, made by Ikea, is poised to continue its march across the world’s living rooms into India, the world’s second most populated country.

Up until last week, non-Indian-owned companies such as Ikea couldn’t be found in India — although they were free to help locals, as the Ikea Foundation has been doing for a few years. A vote Tuesday now allows foreign companies full ownership of stores selling a single brand, a shift from the 51 percent ownership that had been voted on in November, according to Bloomberg Businessweek.

Single branders such as Ikea and Starbucks can now move on into India’s $400 billion retail market, while multibrand retailers such as Walmart and  Carrefour have to watch from the sidelines. The BBC notes that those single branders that make their way into India do have to do one thing: “They are required to buy 30% of their goods from domestic small industries.”.

“People think that this would lead to a positive stance on multi-brand retail soon,” Sameer Narang, a Mumbai-based analyst with HDFC Securities Ltd., said to Businessweek. “My opinion is that it’s not coming any time soon, given the way things went the last time the government tried to introduce it.”

Prime Minister Manmohan Singh and his administration have tried to do that, the site notes, but gotten “opposition from its own allies and a corruption scandal that paralyzed parliament.”