IKEA's €1.5 billion investment plan gets final nod
02 May 2013
The Cabinet Committee on Economic Affairs (CCEA) today formally cleared Swedish furniture retailer IKEA's proposal to invest €1.5 billion in retail outlets, paving the way for the roll-out of its furniture-cum-restaurant chains in India.
''The Cabinet Committee on Economic Affairs today gave its approval to the proposal of Ingka Holding BV, Netherlands, as recommended by the Foreign Investment Promotion Board (FIPB),'' a brief release said, adding that the approval would result in FDI inflows amounting to Rs10,500 crore approximately into the country.
"Yes, it is cleared," information and broadcasting minister Manish Tewari said, referring to IKEA's investment proposal.
Last June, IKEA had proposed an investment of Rs10,500 crore to set up 10 furnishing and homeware stores as well as allied infrastructure that include cafeterias in India over the next 10 years. Subsequently, it plans to open 15 more stores.
In January, the country's Foreign Investment Promotion Board (FIPB) allowed IKEA to invest Rs4,500 crore out of its proposed Rs10,500 crore, in opening single-brand retail stores across the country.
The proposal was forwarded to CCEA for consideration, as foreign direct investments above Rs1,200 crore of require CCEA's approval.
Apart from furniture, IKEA had in its original application, sought approval to sell items such as upholstery and other accessories, consumer electronics, leather products, and lifestyle products, food and beverages at cafes in its premises.
IKEA has sent its application for review, seeking permission to let it open cafeteria / restaurant inside all its stores in India, in line with its global concept.
IKEA, controlled by Sweden's Kampard family, is the world's largest furniture retailer running 338 stores in 38 countries across the globe and reported a turnover of €27.5 billion for the fiscal year ended August 2012.
The proposal, if approved, will be the largest investment in Indian retail sector since the government amended the laws last year to allow 100 per cent foreign investment in single-brand retail.
Meanwhile, Swedish fashion retailer Hennes & Mauritz has also applied for 100-per cent FDI in single-brand retail in India seeking to invest 700 crore for opening 50 stores to market its products (See: Swedish clothing retailer H&M wants to open 50 stores in India)
Separately, CCEA is also likely to take up two major port proposals with an investment of Rs16,000 crore in its next meeting.
The two ports, one in West Bengal and the other one in Andhra Pradesh, are expected to ramp up the country's port capacity by 100 million tonnes.
