MUMBAI, Nov 24 (Reuters) - A top government official on
Saturday defended India's decision to permit IKEA to
sell only furniture products in the country, curtailing the
Swedish retailer's investment plans in a fast growing consumer
The Foreign Investment Promotion Board (FIPB), which clears
foreign investment proposals in the country, approved on Tuesday
IKEA's 1.5 billion euros ($1.9 billion) investment plan on
conditions that the retailer would operate only in its core
"It's a single brand approval. So they can sell those items
which they can brand," Arvind Mayaram, economic affairs
secretary at the finance ministry and one of the members of the
FIPB, told reporters.
"Whatever they can brand, they have been permitted to."
India's federal cabinet needs to approve the decision of the
FIPB before it comes into effect.
On Friday, local newspapers reported that IKEA had been
forbidden from selling any food or drinks and other items
including textile products and office supplies.
It is not yet clear whether product restrictions will delay
or alter IKEA's investment plans in the country. The retailer
has said it will review the details of the approval once they
are made public.
The government has presented IKEA's planned entry as a sign
that foreign investors have kept faith with Asia's third-largest
economy, at a time when growth has declined and political
protests have erupted over expansion by foreign firms.
India has thrown open its doors to foreign retailers this
year, liberalising investment rules to allow in global
supermarket chains and as well as lifting an investment cap on
single-brand retailers such as IKEA.
But the rule changes have provoked a furious backlash from
some political parties and domestic retailers, a reaction which
threatens to derail a package of pro-market reforms aimed at
($1 = 0.7761 euros)
(Reporting by Kaustubh Kulkarni; Writing by Rajesh Kumar Singh,
editing by William Hardy)