Saharanpur-based Nafees Ahmed, who has been manufacturing wooden furniture for over two generations and exports 10% of his output through a consortium, had hoped to turn supplier to Swedish furniture company IKEA. Now he is unsure if he will ever get a chance.
With the latest government notification on foreign direct investment (FDI) in single brand retail that tweaked the clause of 30% procurement from micro, small and medium enterprises (MSMEs) from “mandatory” to “preferably”, furniture manufacturers are confused.
“Now manufacturers are saying that IKEA may not procure from micro and small manufacturers like us. It was a golden opportunity for us to scale-up our production and have an assured market to sell, which now seems uncertain,” said Ahmed.
Furniture manufacturers all over India share Ahmed’s quandary. “It is no more mandatory for single brand retailers to procure 30% goods from MSMEs,” said VK Agrawal, president, Federation of micro and small and medium enterprises. “They may procure from medium enterprises too.”
“This shift in stand by the government is surprising and will surely affect the furniture industry,” said K Narayan, national coordinator of the Cluster Confederation of India.
Manufactures like the Furnit-ure Manufacturers and Mercha-nts’ Association (FuMMA), Kerala also plan to take the issue up with the government.
“If the government really wants to help MSMEs, they should have a dialogue with the sector, because IKEA will join hands with big industries at the expense of micro and small units,” said Narayan, member, FuMMA.
IKEA had sought that local firms that supply its inventory should continue to qualify as small industries even if their investments exceed Rs. 5.5 crore after their association with it.