Press Esc to close
Sunday 26 October 2014
News updated at 2:29 AM IST
Weather
Max: 27°C
Min : 19.2°C
In Bangalore
Generally cloudy

IKEA's Rs 10,500-cr proposal gets nod

New Delhi, Nov 20, 2012, DHNS:

Market players hail move as major step

Swedish home furnishing major IKEA’S proposal to invest Rs 10,500 crore for setting up shops in India got the government investment promotion board’s approval on Tuesday.

This is the largest investment in the single brand retailing in the country ever since the government relaxed rules for investment in the sector in January. IKEA proposes to invest in single-brand retail trading through a 100 per cent subsidiary, and plans to set up 25 stores in the country.

The proposal, however, awaits approval of the Cabinet Committee on Economic Affairs, as the Foreign Investment Promotion Board (FIPB) can clear investment applications worth up to Rs 1,200 crore only.


The government had relaxed the mandatory 30 per cent sourcing clause in September, thereafter, IKEA, which had earlier expressed concerns over the issues, had filled its final application early in November.

The company had earlier indicated that it could invest up to $757 million in the first stage of its plan in India, and that its total investment over the next decade or two could eventually reach $1.9 billion.

However, the government’s mandatory provision of 30 per cent items sold by foreign retailers to be sourced from India’s small and medium enterprises, had the company’s reservations as believed that given the scale of its ambitions, its Indian suppliers could expect to grow well beyond the $1 million capital investment cap that defines small enterprises.

However, New Delhi finally agreed last month to relax the sourcing condition.
It now requires single-brand retailers to source 30 per cent of their products locally, “preferably” from small and medium enterprises.

Soon after the relaxation of rules, president and chief executive of the company Mikael Ohlsson had said he believed the new policy guidelines supported the business needs of many single-brand retailers, and that it would benefit consumers, as well as the development of suppliers and many producers in India.

Market players called the clearance of IKEA’s proposal a major step forward in India’s subdued current investment scenario.

The FIPB had last cleared three major proposals, which included British footwear retailer Pavers England Ltd to open fully-owned stores, a 51 per cent joint venture of American luxury clothing retailer Brooks Brothers and Italian jewellery maker Damiani’s plan to form a venture with Mehta’s Pvt Ltd.

Go to Top

Photo Gallery
Mrs. Komal Kalra Pagarani who is all set to represent India...

Mrs. Komal Kalra Pagarani who is all set to represent India...

Fire at Balaji Studio Killick Nixon Studios in Mumbai...

Fire at Balaji Studio Killick Nixon Studios in Mumbai...

Sikh religious warriors, display their horse-riding skills at an event organized to celebrate...

Sikh religious warriors, display their horse-riding skills at an event organized to celebrate...

Bollywood actor Shatrughan Sinha with his family during Amitabh Bachchan's Diwali party in Mumbai..

Bollywood actor Shatrughan Sinha with his family during Amitabh Bachchan's Diwali party in Mumbai..

Sachin Tendulkar and his wife Anjali with Abhishek Bachchan during Bachchans' Diwali party...

Sachin Tendulkar and his wife Anjali with Abhishek Bachchan during Bachchans' Diwali party...

Narendra Modi clicks photographs during the Diwali Mangal Milan programme at BJP headquarters...

Narendra Modi clicks photographs during the Diwali Mangal Milan programme at BJP headquarters...

Nitin Gadkari leaves after meeting RSS Chief Mohan Bhagwat at RSS headquarters in Nagpur...

Nitin Gadkari leaves after meeting RSS Chief Mohan Bhagwat at RSS headquarters in Nagpur...

Brother & Sister take holy dip in river Yamuna on the occasion of Bhai Dooj...

Brother & Sister take holy dip in river Yamuna on the occasion of Bhai Dooj...

Dhoni talks to Hockey India player Ashunta Lakra during launch of hockey team in Ranchi...

Dhoni talks to Hockey India player Ashunta Lakra during launch of hockey team in Ranchi...

Brother of Thailand's Prime Minister Payap Shinawatra takes part in Robe...

Brother of Thailand's Prime Minister Payap Shinawatra takes part in Robe...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523