Commerce and Industry Minister Anand Sharma on Tuesday told Swedish counterpart Annie Loof (Minister for Enterprise, Government of the Kingdom of Sweden) he hoped IKEA would soon secure approval to commence operations in India.
This follows the finance ministry reviewing the Swedish home furnishing major’s plans to invest Rs 10,500 crore to set up single-brand retail stores in the country. The proposal is being examined by the Department of Industrial Policy and Promotion. Ministry officials said the proposal would soon be forwarded to the Foreign Investment Promotion Board (FIPB), scheduled to take a decision on the issue next month.
After FIPB clearance, the proposal would have to be approved by the Cabinet Committee on Economic Affairs, as FIPB can only clear investment applications worth up to Rs 1,200 crore.
The IKEA Group proposes to invest in India’s single-brand retail segment through a wholly-owned subsidiary. According to IKEA’s proposal, it would invest ^600 million (Rs 4,200 crore) to open 10 stores in the first stage. The remaining ^900 million (Rs 6,300 crore) would later used to open 15 additional stores.
Earlier, the company had expressed concern on the mandatory 30 per cent sourcing clause in the single-brand retail segment. However, after the government relaxed the norm, IKEA had filed its application earlier this month.
Recently, FIPB had cleared foreign investment proposals of three single-brand retailers, including British footwear retailer Pavers England, to open-fully-owned stores.
It has also approved a 51 per cent joint venture of American luxury clothing retailer Brooks Brothers and Italian jewellery maker Damiani’s plan to form a venture with Mehta’s Pvt Ltd.
