Swedish furniture and home accessories retailer IKEA’s plans to enter the Indian market got a big boost with the Foreign Investment Promotion Board (FIPB) giving the much-awaited green signal to the company’s `10,500-crore investment proposal for opening 25 stores across the country.
“The FIPB has approved the proposal of IKEA,” Economic Affairs Secretary Arvind Mayaram said after FIPB’s board meeting. IKEA, which manufactures and sells home and office furnishing products, proposes to invest in single brand retail trading in India through a 100 per cent subsidiary.
The Department of Industrial Policy and Promotion has already scrutinised IKEA’s investment proposal. As part of the plan, the company will be investing euros 600 million in the first phase and an additional estimated euro 900 million later for setting up 25 stores through a wholly owned subsidiary.
The proposal will now have to be cleared by the Cabinet Committee on Economic Affairs as FIPB can clear investment proposals to the tune of up to `1,200 crore only.
IKEA’s FDI proposal is the largest in single brand retailing ever since the government has allowed foreign investment in this sector in January.
With the government relaxing the mandatory 30 per cent sourcing clause in September, IKEA which had earlier expressed concerns over the issues had put in its final application to FIPB earlier this month.