Govt keen to clear Ikea’s first mega-FDI proposal

Ikea cafes, restaurants and furniture outlets may soon be a

reality in India, as the 25-billion euros (above Rs 1, 80, 000 crores) Swedish furniture chain prepares for its next meeting, scheduled for December 31 with the Foreign Investment Promotion Board (FIPB) to review its conditional approval given to the company on November 20.

FIPB had last month recommended the core furniture business of IKEA for consideration of the Cabinet Committee on Economic Affairs (CCEA), after striking off the chain’s request for cafés/restaurants, besides 18 other product categories of the 50 it had proposed for India. Even as IKEA had sought approval to invest Rs 10,500 crores, FIPB nod came for just Rs 4,500 crores. But in a “review”, FIPB will take up the IKEA case again, based on a “request of the Department of Industrial Policy & Promotion”, according to the board’s agenda note for the year-end meeting.

Replying to a query on IKEA on the sidelines of a conference, Commerce & Industry Minister Anand Sharma said, “IKEA has a global model as a single-brand retailer. And, we have a clear definition of what we describe as single-brand. We see no reason why its global model, once we have allowed 100 per cent FDI in single-brand retail, should be changed in any manner.”

If FIPB revises its recommendation on IKEA, by approving its cafés and restaurants, this will be the second instance of the government paying heed to the company’s concerns. Earlier in the year, the government had relaxed the single-brand retail FDI policy, by removing the condition of 30 per cent mandatory sourcing from small and medium enterprises.