Reforms get a leg-up, India its largest retail FDI with Ikea nod
“The FIPB has approved the proposal of Ikea,” economic affairs secretary Arvind Mayaram said after the board meeting.
Ikea’s proposal — it intends to invest R4,200 crore in the first phase — will come handy for the government in Parliament as it braces to counter criticism over its recent decisions to attract more FDI into the retail sector. While a political consensus on FDI in retail still seems elusive, the government has been stoutly defending its decision, saying this would benefit farmers and consumers, besides creating several thousands of new jobs.
India raised the FDI limit in single-brand retail to 100% in January 2012 and allowed 51% FDI in multi-brand retail in September. The Swedish company’s investment will be routed through its wholly-owned subsidiary Ingka Holding Overseas BV. The company will set up 25 retail stores in India, in two phases.
Although the FIPB okayed the proposal, the Cabinet Committee on Economic Affairs (CCEA) must still vet it, as under the FDI policy, FIPB can clear investment applications only up to Rs 1,200 crore.
Last month, the Swedish retailer had submitted a fresh application to open stores in India after the government tweaked sourcing norms for FDI exceeding 51% in single-brand retail and diluted the previous condition of mandatory sourcing of 30% of inputs
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