Ikea’s Rs.10,500-crore FDI proposal gets FIPB nod
Ikea, which reported revenues of 26 billion euros in 2011 and has 338 stores had sought a review of the decision that was taken by the FIPB in November wherein while approving its first tranche of investment worth R4,200 crore, the board had struck off 18 product categories of the 30 proposed and refused permission to the company for opening its signature cafes and restaurants in the stores.
The board had said it could not sell items such as home and
office-use products, textiles, apparel and fabric, electronic items, leather products, toys, books, and lifestyle and travel-related items. Ikea then approached the industry department, which forwarded the request to the FIPB seeking a review of its November 20, 2012, decision. Subsequently, the FIPB deliberated on the representation at its meeting on December 31, 2012, and sought clarifications from the company.
The government in September 2012 relaxed a provision requiring single-brand retailers to source at least 30% of their requirements from small and medium enterprises, modifying rules to say it was “preferable” rather than ‘mandatory. Ikea will operate in India through its wholly-owned subsidiary Ingka Holding Overseas BV and the investment of R10,500 crore will be the largest ever by a single-brand retailer in India.
For the government Ikea had almost become a test case since
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