Anand Sharma assures nod for Ikea soon

Assurance to Swedish counterpart comes ahead of FIPB decision expected in November

Commerce and Industry Minister Anand Sharma today told his Swedish counterpart Annie Loof (Minister for Enterprise, Government of the Kingdom of Sweden) he hoped Ikea would soon receive clearance for commencing operations in India.

The assurance comes ahead of the Finance Ministry’s review of the proposal of the Swedish home furnishing major’s plans to invest Rs 10,500 crore to set up single-brand retail stores in the country.

Currently, the proposal is being examined by the Department of Industrial Policy and Promotion (DIPP). According to officials in the ministry the proposal would soon be forwarded to the Foreign Investment Promotion Board (FIPB), which is scheduled to take a decision on the issue next month.

After FIPB's clearance, the proposal will have to be finally approved by the Cabinet Committee on Economic Affairs (CCEA) as the board can clear investment applications worth up to Rs 1,200 crore only.

The IKEA Group, 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. As per the proposal, IKEA would be investing 600 million euros (Rs 4,200 crore) to open 10 stores in the first stage. The remaining 900 million euros (Rs 6,300 crore) would used to open 15 more stores going ahead.

With the government relaxing the mandatory 30 per cent sourcing clause in September, IKEA which had earlier expressed concerns over the issue, had filled its final application earlier this month.

Ikea plans to sell products like furnitures, blankets, kitchen utensils, bathroom fittings, electrical equipment, tableware, cooking range, toys, leather articles, cosmetics, life style items, consumer electronics and gadgets. Besides, it also proposes to set up restaurants, food mart, nursing home and publications under its brand name

Recently, the FIPB has cleared foreign investment proposals of three single-brand retailers, including that of British footwear retailer Pavers England Ltd, 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.