Author: Aaron Chaze

COCA-COLA AND IKEA STEP UP INVESTMENT IN INDIA, DESPITE SLOWING GROWTH

By Aaron Chaze

Ikea, the Swedish retailer, has applied to the Indian government for permission to open 25 stores across the country, investing $1.9 billion in the country.

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Coca-Cola boosts production in India

Photo Credits: JEREMYRICHARDS / Shutterstock.com

Foreign retailers are likely to benefit from New Delhi's policy allowing investments from single-brand retailers. Multibrand retailers cannot open their own stores. Ikea appears enthusiastic despite the caveat requiring that it source 30% of its inventory from local small-scale industries. The Indian minister for commerce and industry recently pointed out that the government is considering changing the definition of small and medium-size enterprises to facilitate Ikea's proposed investment. The Swedish retailer has supplier relationships with 70 Indian vendors, sourcing $450 million worth of products annually for its global network of stores, and has plans for $1 billion in additional purchases from Indian businesses.

Coca-Cola will invest $5.0 billion in India over an eight-year period—$3.0 billion more than previously indicated—to enhance production and distribution. These proposed investments come as India's GDP growth forecasts are being pared down for the next year largely owing to slowing domestic consumption, a weakening currency and the government's policy paralysis. The Indian central bank lowered its GDP estimate for the 2012–2013 fiscal year to 6.5% from an earlier estimate of 7.3%.