Swedish furniture company Ikea on Tuesday moved a step closer to setting up stores in India with the Foreign Investment Promotion Board (FIPB) clearing its proposal.
The company plans to invest Rs10,500 crore in India, in two tranches, including Rs4,200 crore in the first half, and Rs6,300 crore in the second stage. This would be the biggest investment made to date by any single brand retailer after the government gave its nod for 100% investment in the sector in January.
The proposal needs a stamp of approval from the Cabinet Committee of Economic Affairs — something that should be a cakewalk, feel experts. “The next step will be more or less a formality and it doesn’t look like there are any more obstacles on the way for Ikea,” said Arvind Singhal, chairman, Technopak Advisors.
Ikea plans to set up 25 stores in India and would be selling office and home furnishing. It may also set up restaurants and food mart, nursing home and publications under its brand name. “Ikea has eating joints and restaurants inside their stores in other countries. And they may be looking at something similar in India too,” said Singhal.
Ikea had earlier expressed concerns over the clause of mandatory 30% sourcing from micro, small, and medium enterprises. But in September, the government made it easier for the company by replacing the word ‘mandatory’ with ‘preferable’. Earlier this year, the FIPB also cleared the single brand FDI proposal of British footwear retailer Pavers England to open fully owned stores, besides the 51% joint venture of luxury clothing company Brooks Brothers and Italian jewellery maker