New Delhi: The Finance Ministry today cleared Rs 10,000-crore investment plan of Swedish Furniture major IKEA to open single-brand retail stores, a development which will be underscored by Indian representatives at WEF meet in Davos to lure investors.
"IKEA case has been cleared by Foreign Investment Promotion Board (FIPB) and will now be placed before Cabinet Committee on Economic Affairs (CCEA) for final approval," a source said.
"Yes," Commerce and Industry Minister Anand Sharma said when asked if IKEA's proposal has been cleared in toto.
After CCEA's nod, IKEA would be able to open cafeterias at its proposed retail outlets.
Sharma said the decision will "resonate not only in Davos but in the all major countries of the world".
"It sends a clear message that India is very serious in ensuring that whatever policy initiatives we have taken they are implemented in letter and spirit and also to create confidence among the global investors that India has the welcoming environment for FDI," Sharma said.
The FIPB was earlier scheduled to take up the IKEA case on January 24, but the meet was advanced so that it could be cleared before the Indian delegation leaves for Davos.
The approval will prevent the possibility of tough questions which the officials and ministers might have had to face at the meeting of the global corporate leaders.
IKEA in a statement said: "We consider this as a very positive development. We are now awaiting for approval from the Cabinet and subsequently a notification so that we can initiate the process of establishing IKEA stores in the country."
Earlier, IKEA was given permission to invest only Rs 4,200 crore. However, following only a part approval to its investment plans, the company took up the issue with industry department that in turn asked the Board to reconsider the decision.
Sharma exuded the confidence that Cabinet would give its approval.
IKEA Group, which manufactures and sells home and office furnishing products, proposes to invest in single-brand retail trading in India through a 100 per cent subsidiary.
The world's largest furniture retailer plans to set up 10 furnishing and home-ware stores as well as allied infrastructure in over 10 years in India. Subsequently, it plans to open 15 more stores.
IKEA's would be the largest investment in the single- brand retailing ever since the government has allowed foreign investment in this sector. IKEA has been sourcing many products from India for the past 25 years.
With the government relaxing the mandatory 30 per cent sourcing clause in September, IKEA which had earlier expressed concerns over the issues had put in its final application.
Sharma further said the Government is committed to playing a constructive role in encouraging FDI specially in areas which create job and provide technological advancement.
Globally, he said, IKEA has a business model which integrates making them a part of global value chain.
Sharma, who will be attending the WEF at Davos, said India will have an investor round-table expected to be attended by the leading CEOs.
Referring to FDI in multi-brand retail, Sharma said several global companies like Tesco, Carrefour and Walmart have shown interest.
"I am told that some of these CEOs also are meeting us in Davos," he added.
He also expressed confidence that India will soon see foreign investment in the multi-brand retail sector too, where 51 per cent FDI is permitted.
Sharma further said that global retailers will also create job opportunities, provide choice to consumers.
"What will be sourced from India will be sold by these global retailers all over the world, brining to India, besides the job creation, precious foreign exchange," he said.