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IKEA gets okay for full rollout

New Delhi, Jan. 21: Consumers will be able to delight themselves with the entire gamut of services provided by Swedish furniture retailer IKEA.

The Foreign Investment Promotion Board (FIPB) today cleared the company’s entire Rs 10,500-crore proposal; previously the board had cleared a truncated proposal of Rs 4,200 crore that excluded cafetarias inside stores among other items.

IKEA’s investment in single-brand retail will be the biggest in this segment after the government opened up the sector to FDI.

“The Foreign Investment Promotion Board’s (FIPB) decision is a positive development. The government is committed to play a constructive role in encouraging FDI, specifically in areas that create jobs and provide technological advancement,” commerce and industry minister Anand Sharma said.

“Globally, IKEA has a business model, which integrates in its embrace the SMEs and domestic industry, thus making them part of the global value chain,” he added.

The cabinet committee on economic affairs will now take up the proposal.

“For the past two years, the government policy on retail had been going back and forth. The clearance to IKEA will boost global investor confidence as it sends a strong message that the Centre is committed to its policies,” Saloni Nangia, senior vice-president of retail consultancy firm Technopak Advisors, said.

In November, the FIPB had capped IKEA’s investments at Rs 4,200 crore against its original proposal of Rs 10,500 crore. The Swedish company was prohibited from opening cafeterias in its outlets and selling any product that it does not brand, including second-hand furniture, textile items, toys, books and electronic goods.

However, IKEA had written to the commerce ministry, that in keeping with the “IKEA concept” the company must be allowed to retail its entire range of products in India and run in-store restaurants, as it does in every country that it has a store in.

The department of industrial policy and promotion — an arm of the commerce ministry — favoured IKEA’s proposal in its totality and said the firm should be allowed to open stores with its entire range of products to give Indian customers a global experience.

IKEA — the world’s largest furniture retailer — operates 336 stores in 44 countries. It plans to set up 10 furnishing and homeware stores as well as allied infrastructure in over 10 years in India.

Subsequently, it plans to open 15 more stores.

 
 
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