Swedish furniture company Ikea will set up its first Indian outlet in Hyderabad involving an investment of at least $100 million (Rs 600 crore), apart from establishing backward integration for supplier linkages.

An Ikea delegation led by its India chief executive Juvencio Maeztu met Telangana chief minister K Chandrasekhar Rao on Wednesday to finalise the location for its store, said a statement from the chief minister's office. ET first reported in September last year that Ikea was looking at zeroing in on Hyderabad for its India foray.

Telangana industries secretary K Pradeep Chandra said a memorandum of understanding with Ikea will be signed in a month or two. The store will come up on a 10-acre plot, offering direct employment to at least 1,000 people, he said. IKEA proposes to locally source materials such as bamboo, handicrafts and handloom fabrics, apart from locally outsourcing furniture production to indigenous manufacturers by offering designs and technology to suit local needs and tastes.

The furniture retailer, which obtained approvals in November 2012 to invest Rs 10,500 crore over a decade, proposes to set up at least 25 outlets across the country. After Hyderabad, Ikea plans to expand into Bangalore, Mumbai and Delhi over the next few months.