IKEA re-files papers as India eases sourcing norms

Swedish furniture maker IKEA said today it has filed the final documents with the government relating to its investment proposals in keeping with the government's amended policy on single-brand retail, in which it has eased some of the conditions.

The company, which plans to invest about €1.5 billion (Rs10,500 crore) to set up 25 stores, had to re-file its application with the Foreign Investment Promotion Board.

''After 25 years of sourcing many IKEA products in the country, the IKEA Group has, as of end June this year, submitted its application to start retail operations in India and has filed the final document this week in accordance with the amended policy,'' Mikael Ohlsson, president and chief executive of the group, said in a press release.

Last month the government had eased sourcing norms for foreign direct investment exceeding 51 per cent in single-brand retail, mainly diluting the condition that 30 per cent of materials must be sourced from the country. At the same time, foreign firms seeking to avail of this relaxation would have to set up a manufacturing facility in India.

The company had earlier raised concerns regarding the mandatory 30 per cent sourcing from small and medium industries, leading to a delay in its applications.

Ohlsson's statement further said, ''The IKEA Group views the recent developments related to FDI in single-brand retail positively. We believe the current policy guidelines support the business needs of many single-brand retailers and will benefit consumers as well as the development of many suppliers and producers in India.''