The Government of India will soon approve the proposal of Swedish home furnishing retailer IKEA to invest Rs. 105 billion to set up single-brand retail outlets across the country.
Speaking at the World Economic Forum on India in Gurgaon, near New Delhi, Commerce and Industry Minister Anand Sharma said the Department of Industrial Policy and Promotion (DIPP) is currently scrutinizing IKEA’s proposal.
He further informed that the application would be considered at a meeting of the Foreign Investment Promotion Board (FIPB), scheduled to take place on November 20.
Since the FIPB can clear investment proposals only up to Rs. 12 billion, IKEA’s proposal would have to be finally cleared by the Cabinet Committee on Economic Affairs (CCEA), after it gets a nod from the FIPB.
As per the proposal, the IKEA Group plans to invest in India’s single-brand retail sector through a 100 percent subsidiary company, and open 25 stores in near future.
The planned Rs. 105 billion investment would be the largest FDI in India’s single-brand retail sector since the Government allowed 100 percent foreign investment at the beginning of the year.
In September, the Indian Government relaxed the mandatory 30 percent local sourcing clause, over which the Swedish firm had expressed its concerns earlier. Subsequently, IKEA submitted its proposal to the Indian Government.
Recently, the FIPB had approved a 51 percent joint venture proposal of US high-end apparel retailer Brooks Brothers.
Mr. Sharma expressed hope that global retailers, which are present in wholesale distribution, would consider opening retail outlets in the country, as the Government has now opened doors to FDI in the country’s multi-brand retail sector.