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Govt clears Swedish furniture giant IKEA’s Rs 10,500-cr entry
Sanjeev Sharma/TNS

Retail milestone
Govt had revised the policy on single brand retail last year by allowing 100% foreign ownership
It will be the biggest investment in the single brand retail space in India
Indian enterprises to get chance in a range of labour-intensive sectors for integrating into a global value chain

New Delhi, May 2
The decks are cleared for the entry of Swedish furniture brand, IKEA in the Indian market through the single brand retail route, which will make it the largest investment in this format.

The Cabinet Committee on Economic Affairs (CCEA) cleared the Rs 10,500-crore investment by IKEA as recommended by the Foreign Investment Promotion Board (FIPB).

It had to be referred to CCEA as the investment size is above the threshold limit that FIPB can clear on its own.

This will be the biggest investment in the single brand retail space in India and marks the entry of one of the world's iconic brands into India.

Commenting on the decision, Commerce and Industry Minister Anand Sharma said today's decision was indeed a historic one.

Sharma said this would be the biggest foreign investment in the retail segment and would provide an opportunity to Indian small and medium enterprises in a wide range of labour intensive sectors for integrating into global value chain. On the other hand, it will also provide a diverse choice for the Indian consumers for a wide range of products, he added.

The Minister said this decision has again re-affirmed the commitment of Government for maintaining a liberal economic agenda.

The government had revised the policy on single brand retail last year by allowing 100 per cent foreign ownership. Following concerns raised by IKEA, the government had also liberalized the sourcing conditions from India which now say that the local sourcing has to be "preferably 30 per cent".

Though the IKEA proposal had come in June last year it had been held due to some of these concerns. In addition, IKEA wanted cafeteria and food outlets in its stores that stock furniture and home appliances in line with its global format.

This was a thorny issue as opening up food outlets was considered a thin line between multi brand retail norms and single brand retail. IKEA will also offer entertainment for children at its stores. It plans to invest in 25 retail stores in the initial phase.

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