Business Standard

FIPB roadblock for IKEA products

Eighteen of 30 product categories proposed by Swedish furniture major struck off

Nivedita Mookerji  |  New Delhi 

In what could spoil the single-brand retail party, the Foreign Investment Promotion Board (FIPB) is learnt to have struck off as many as 18 product categories out of the 30 proposed by Euro 25-billion Swedish furniture major IKEA.

Coinciding with the din in Parliament over the government permitting 51 per cent foreign direct investment in multi-brand retail, single-brand retail would run into a rough patch too, if reviews its India entry plans over the fresh barriers thrown up by the FIPB.

It is believed many single-brand retail chains, including some from Europe, have been waiting for the green signal to the big-ticket proposal as a test case, before they send in their applications. 

WHAT’S OUT
Some of the products rejected by FIPB
  • Home and office use products, solutions, fittings, furnishings and accessories including stationery
  • Textile products including apparels and fabrics
  • Consumer electronics and accessories
  • Cleaning products and accessories
  • Leather products
  • Storage and sorting products and accessories
  • Children’s products and accessories
  • Safety-related products
  • Travel-related products
  • Cosmetics and accessories
  • Recycling solutions and products
  • Lifestyle products and accessories
  • Decorative products
  • Gift articles and accessories
  • Food and beverages to be served at the restaurants and café to customers in the retail stores
  • Beach products and accessories

Industry sources pointed out that IKEA, which operates over 300 stores across around 40 countries, typically goes out to foreign markets with its full range of products and categories, and with so many categories deleted from its list, the chain might rethink on whether to enter the India market or not.

But replying to Business Standard, said, “We are now internally reviewing the details of the latest decision from FIPB.” The company said it would be in a position to comment on its India stand “when we are more clear about what it means for us in the coming days”.

The proposal was taken up by FIPB, a key wing in the finance ministry, for vetting foreign investment proposals, on Thursday.

Officials said the intent to invest Euro 1.5 billion in India to set up stores across the country was recommended for clearance by the FIPB, but with conditions attached.

Even as the earlier condition of 30 per cent sourcing from small and medium enterprises was removed from the single brand retail following IKEA’s stand that it was not feasible to follow, the new set of conditions recommended by may upset its plans.          

The category of items that has taken out of the list of what all can do in India include home and office use products, solutions, fittings, furnishings and accessories including stationery; textile products including apparels and fabrics; toys, books and gadgets; consumer electronics and accessories; decorative products; leather products; storage and sorting products and accessories; cleaning products and accessories; children products and accessories; safety-related products; travel-related products; cosmetics and accessories; gift articles and accessories; lifestyle products and accessories; beach products and accessories; recycling solutions and products; food and beverages to be served at the restaurants and café to customers in the retail stores; products under development by internationally as well as those developed especially for the Indian market.

has been permitted to sell furniture products, which is the chain’s core business, in India. Also, knocked-down furniture and accessories related to furniture would be allowed for sale. Other things that it can showcase and sell in India include cushions, pillows, rugs, mattresses, quilts, curtains, window shades, blinds, electrical and kitchen utensils, cooking range equipment, bathroom fixtures,  tableware,  mirror, frames, pictures, candles, and glassware products.      

Besides the other restrictions, has also recommended that no activities falling within the purview of NBFC (non-banking financial companies) activities will be conducted by the applicant. That would imply that cannot offer any finance scheme to its customers.      

A government official argued that “concessions and adjustments are bound to be made on both sides.” may decide to tailor its outlets accordingly, he added. Restriction on a few non-core products that may not contribute much to its bottom line may not pose a hurdle, he added.

IKEA, in its second coming, had made its application to the DIPP on June 22. It had earlier decided to drop the plan due to the FDI restriction in the country as the chain wanted to be on its own with 100 per cent ownership, rather than diluting its brand with a partner. The stores are expected to occupy as much as 100,000 sq ft of space each.

RECOMMENDED FOR YOU

FIPB roadblock for IKEA products

Eighteen of 30 product categories proposed by Swedish furniture major struck off

In what could spoil the single-brand retail party, the Foreign Investment Promotion Board (FIPB) is learnt to have struck off as many as 18 product categories out of the 30 proposed by Euro 25-billion Swedish furniture major IKEA.

In what could spoil the single-brand retail party, the Foreign Investment Promotion Board (FIPB) is learnt to have struck off as many as 18 product categories out of the 30 proposed by Euro 25-billion Swedish furniture major IKEA.

Coinciding with the din in Parliament over the government permitting 51 per cent foreign direct investment in multi-brand retail, single-brand retail would run into a rough patch too, if reviews its India entry plans over the fresh barriers thrown up by the FIPB.

It is believed many single-brand retail chains, including some from Europe, have been waiting for the green signal to the big-ticket proposal as a test case, before they send in their applications. 

WHAT’S OUT
Some of the products rejected by FIPB
  • Home and office use products, solutions, fittings, furnishings and accessories including stationery
  • Textile products including apparels and fabrics
  • Consumer electronics and accessories
  • Cleaning products and accessories
  • Leather products
  • Storage and sorting products and accessories
  • Children’s products and accessories
  • Safety-related products
  • Travel-related products
  • Cosmetics and accessories
  • Recycling solutions and products
  • Lifestyle products and accessories
  • Decorative products
  • Gift articles and accessories
  • Food and beverages to be served at the restaurants and café to customers in the retail stores
  • Beach products and accessories

Industry sources pointed out that IKEA, which operates over 300 stores across around 40 countries, typically goes out to foreign markets with its full range of products and categories, and with so many categories deleted from its list, the chain might rethink on whether to enter the India market or not.

But replying to Business Standard, said, “We are now internally reviewing the details of the latest decision from FIPB.” The company said it would be in a position to comment on its India stand “when we are more clear about what it means for us in the coming days”.

The proposal was taken up by FIPB, a key wing in the finance ministry, for vetting foreign investment proposals, on Thursday.

Officials said the intent to invest Euro 1.5 billion in India to set up stores across the country was recommended for clearance by the FIPB, but with conditions attached.

Even as the earlier condition of 30 per cent sourcing from small and medium enterprises was removed from the single brand retail following IKEA’s stand that it was not feasible to follow, the new set of conditions recommended by may upset its plans.          

The category of items that has taken out of the list of what all can do in India include home and office use products, solutions, fittings, furnishings and accessories including stationery; textile products including apparels and fabrics; toys, books and gadgets; consumer electronics and accessories; decorative products; leather products; storage and sorting products and accessories; cleaning products and accessories; children products and accessories; safety-related products; travel-related products; cosmetics and accessories; gift articles and accessories; lifestyle products and accessories; beach products and accessories; recycling solutions and products; food and beverages to be served at the restaurants and café to customers in the retail stores; products under development by internationally as well as those developed especially for the Indian market.

has been permitted to sell furniture products, which is the chain’s core business, in India. Also, knocked-down furniture and accessories related to furniture would be allowed for sale. Other things that it can showcase and sell in India include cushions, pillows, rugs, mattresses, quilts, curtains, window shades, blinds, electrical and kitchen utensils, cooking range equipment, bathroom fixtures,  tableware,  mirror, frames, pictures, candles, and glassware products.      

Besides the other restrictions, has also recommended that no activities falling within the purview of NBFC (non-banking financial companies) activities will be conducted by the applicant. That would imply that cannot offer any finance scheme to its customers.      

A government official argued that “concessions and adjustments are bound to be made on both sides.” may decide to tailor its outlets accordingly, he added. Restriction on a few non-core products that may not contribute much to its bottom line may not pose a hurdle, he added.

IKEA, in its second coming, had made its application to the DIPP on June 22. It had earlier decided to drop the plan due to the FDI restriction in the country as the chain wanted to be on its own with 100 per cent ownership, rather than diluting its brand with a partner. The stores are expected to occupy as much as 100,000 sq ft of space each.

image
Business Standard
177 22

FIPB roadblock for IKEA products

Eighteen of 30 product categories proposed by Swedish furniture major struck off

In what could spoil the single-brand retail party, the Foreign Investment Promotion Board (FIPB) is learnt to have struck off as many as 18 product categories out of the 30 proposed by Euro 25-billion Swedish furniture major IKEA.

Coinciding with the din in Parliament over the government permitting 51 per cent foreign direct investment in multi-brand retail, single-brand retail would run into a rough patch too, if reviews its India entry plans over the fresh barriers thrown up by the FIPB.

It is believed many single-brand retail chains, including some from Europe, have been waiting for the green signal to the big-ticket proposal as a test case, before they send in their applications. 

WHAT’S OUT
Some of the products rejected by FIPB
  • Home and office use products, solutions, fittings, furnishings and accessories including stationery
  • Textile products including apparels and fabrics
  • Consumer electronics and accessories
  • Cleaning products and accessories
  • Leather products
  • Storage and sorting products and accessories
  • Children’s products and accessories
  • Safety-related products
  • Travel-related products
  • Cosmetics and accessories
  • Recycling solutions and products
  • Lifestyle products and accessories
  • Decorative products
  • Gift articles and accessories
  • Food and beverages to be served at the restaurants and café to customers in the retail stores
  • Beach products and accessories

Industry sources pointed out that IKEA, which operates over 300 stores across around 40 countries, typically goes out to foreign markets with its full range of products and categories, and with so many categories deleted from its list, the chain might rethink on whether to enter the India market or not.

But replying to Business Standard, said, “We are now internally reviewing the details of the latest decision from FIPB.” The company said it would be in a position to comment on its India stand “when we are more clear about what it means for us in the coming days”.

The proposal was taken up by FIPB, a key wing in the finance ministry, for vetting foreign investment proposals, on Thursday.

Officials said the intent to invest Euro 1.5 billion in India to set up stores across the country was recommended for clearance by the FIPB, but with conditions attached.

Even as the earlier condition of 30 per cent sourcing from small and medium enterprises was removed from the single brand retail following IKEA’s stand that it was not feasible to follow, the new set of conditions recommended by may upset its plans.          

The category of items that has taken out of the list of what all can do in India include home and office use products, solutions, fittings, furnishings and accessories including stationery; textile products including apparels and fabrics; toys, books and gadgets; consumer electronics and accessories; decorative products; leather products; storage and sorting products and accessories; cleaning products and accessories; children products and accessories; safety-related products; travel-related products; cosmetics and accessories; gift articles and accessories; lifestyle products and accessories; beach products and accessories; recycling solutions and products; food and beverages to be served at the restaurants and café to customers in the retail stores; products under development by internationally as well as those developed especially for the Indian market.

has been permitted to sell furniture products, which is the chain’s core business, in India. Also, knocked-down furniture and accessories related to furniture would be allowed for sale. Other things that it can showcase and sell in India include cushions, pillows, rugs, mattresses, quilts, curtains, window shades, blinds, electrical and kitchen utensils, cooking range equipment, bathroom fixtures,  tableware,  mirror, frames, pictures, candles, and glassware products.      

Besides the other restrictions, has also recommended that no activities falling within the purview of NBFC (non-banking financial companies) activities will be conducted by the applicant. That would imply that cannot offer any finance scheme to its customers.      

A government official argued that “concessions and adjustments are bound to be made on both sides.” may decide to tailor its outlets accordingly, he added. Restriction on a few non-core products that may not contribute much to its bottom line may not pose a hurdle, he added.

IKEA, in its second coming, had made its application to the DIPP on June 22. It had earlier decided to drop the plan due to the FDI restriction in the country as the chain wanted to be on its own with 100 per cent ownership, rather than diluting its brand with a partner. The stores are expected to occupy as much as 100,000 sq ft of space each.

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard