The first big ticket foreign investment proposal in single brand retail from Ikea is likely to go through with the entire range of services the company wishes to provide its customers.
A substantial range of Ikea products, along with food and beverages served in its cafetarias and restaurants, is likely to be cleared by the government in a new proposal the company has placed before the Foreign Investment Promotion Board (FIPB).
The proposal from the Swedish furniture manufacturer would be considered, Commerce and Industry Minister Anand Sharma said on Wednesday.
Ikea has a global model as a single-brand retailer... Thats what they want, and frankly speaking, we see no reason why their global model, now that we have allowed 100 per cent FDI in single brand retail, has to be changed in any manner. The government has taken very sensitively to a note of representation that Ikea had made in this regard, and a favourable view has been taken, Sharma told reporters.
However the size of the investment is not expected to go up from the Rs 4,200 crore cleared by FIPB earlier. Once the board approves Ikeas proposal, it will go to the Cabinet Committee on Economic Affairs.
Reacting to Sharmas statement, a spokesperson for the company said, The Ikea group appreciates the Indian governments support for (our) application as per the global Ikea concept. Ikea respects the Indian governments efforts... India is an important market and the group is now waiting for approval from the Cabinet Committee on Economic Affairs.
Sources said Ikea had asked for a review of FIPBs November 20 decision, which cleared only some categories of products from the total 33 the company had applied for. The board had found overlaps between categories. The company is now learnt to have cleaned up the bona fide mistakes, and applied afresh to sell products that include textile products, consumer electronics, leather products and lifestyle products, besides food and beverages to be served at its restaurants and cafetarias.
Ikea has over 300 stores in some 40 countries around the world. FIPB considered a proposal from Ingka Holding Overseas BV, Ikeas parent company, to set up a wholly-owned subsidiary to undertake single brand retailing of its products.
After the FIPB approval, the company sent a representation to the Department of Industrial Policy and Promotion (DIPP) for a review. DIPP has supported the companys proposal asking FIPB for a review.