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| Edited By: Team DNA |Source: DNA |Updated: Mar 19, 2018, 02:16 AM IST
The Foreign Investment Promotion Board (FIPB) has cleared the Rs10,500 crore investment proposal of Swedish furniture major Ikea to open single-brand retail stores along with cafeterias in the country through a 100% subsidiary.
FIPB had earlier permitted it to invest only up to Rs4,200 crore.
“The government is committed to playing a constructive role in enhancing foreign direct investment), especially in areas which create jobs and provide technological enhancement. Globally, Ikea has a business model which integrates in its embrace small and medium enterprises and domestic industry, making them the part of global value chain,” commerce minister Anand Sharma said, announcing the move.
The proposal will now be placed before the Cabinet Committee on Economic Affairs (CCEA) for final approval. Any investment over Rs1,200 crore requires approval from the CCEA, which will take around 15 more days to clear the proposal.
Arvind Singhal, chairman, Technopak Advisors called it a sane decision, though he rued that it took so long.
“However, I don’t think we will see the first Ikea store opening any time in the next two years, if not more. While they are a very successful retailer globally, they do a careful study before entering any new market. Whatever they will do in India will be after a very careful evaluation of the ground realities, viz Indian consumers’ buying habits, whether they will travel long distances or not, etc,” said Singhal.
Typically, Ikea takes 5-7 lakh square feet of retail space in most markets it operates in. Will that be the case here too?
“I really don’t know what would be their store size in India, but whatever Ikea stands for, in terms of quality, pricing, service and dealing with vendors, will be consistent in Indian market as well,” said Singhal.
