The department of industrial policy and promotion (DIPP) has endorsed global retail giant Ikea’s fresh proposal seeking permission to do business in most of the 30 categories. Earlier, while approving the company’s plans, the Foreign Investment Promotion Board (FIPB) had struck down some 18 categories from the company’s list of 30.
In the amended application, Ikea is expected to reclassify, rename and merge some of the categories to suite Indian laws. The FIPB will meet on December 31 to consider among others, the amended proposal.
At its meeting on December 21, DIPP batted for allowing Ikea’s re-worked proposal clearing most of the 30 categories such as restaurants and Cafe (Bistro/Exit Cafe) within Ikea stores; allowing it to retail consumer electronics and textile products among others.
If the FIPB finally clears the revised proposal, Ikea would be able to set up its India operations by mid-2013. Of its R10,500 crore investment plan for India, Ikea has so far got FIPB’s approval to bring in R4,200 crore. The balance is expected to get the FIPB nod on December 31, sources said.
“In order to align with the provisions of the current policy on foreign direct investments, the company will rename earlier categories (rejected before),” a senior DIPP official told FE.
Officials also said Ikea had expressed its inability to pursue its application in India if it was denied entry on categories in which it retails globally.
“The government has taken note of the representation that Ikea has made in this regard and a favourable view has been taken so that we accept their global model and the process of FIPB’s formal approval is currently underway. Frankly speaking we see no reason why their global model, once we have allowed 100% FDI in single brand retail, has to change in any manner,” commerce and industry minister Anand Sharma said.
Ikea, the world’s largest furniture retailer, operates 336 stores in 44 countries. It plans to set up 10 furnishing and homeware stores as well as allied infrastructure over 10 years in India. Subsequently, it plans to open 15 more stores. The FIPB has approved a total of 66 proposals pertaining to single-brand retailing since 2006.
Meanwhile, the finance ministry said FIPB’s approval to Ikea to invest R4,200 crore has been recommended for consideration of Cabinet Committee on Economic Affairs (CCEA). Even after FIPB clearance, FDI proposals of over Rs 1,200 crore have to be approved by the CCEA.
