The Foreign Investment Promotion Board on Monday cleared the Rs. 10,500 crore proposal by Swedish furniture major IKEA to set up single-brand retail stores with cafeterias across the country.
The proposal was hanging in balance since December 31 when it was removed from the agenda of the board meeting for want of more information.
The FIPB had on November 20 given part approval to the company's proposal allowing it to invest R4,200 crore to set up stores for only some of the 33 product categories withholding permission to sell items such as food, textile items and office supplies.
Monday's approval will allow IKEA to sell all its wares as well as set up cafeterias."This is a positive development. The government is committed to play a constructive role in encouraging FDI specially in areas, which create job and provide technological advancement," said Union commerce minister Anand Sharma.
"Globally IKEA has a business model which integrates in its embrace SMEs and domestic industry making them the part of global value chain."
Following the part approval,the company made a representation to the (DIPP), which forwarded the request to FIPB seeking a review of its decision.
IKEA Group, which manufactures and sells home and office furnishing products, proposes to invest in single-brand retail trading in India through a 100% subsidiary
The proposal will now be sent to the cabinet for approval before IKEA will be allowed to set shop.
The company’s entry is being closely watched as an example for other global retailers on how to tackle India's complex rules and bureaucracy.
IKEA hopes to open at least 25 of its stores in India through a 100% owned unit, Ingka Holding, as part of a wider push into emerging markets such as China and Russia.