Swedish furniture major IKEA’s 10,500 crore investment proposal is expected to be approved in a week. The Department of Industrial Policy and Promotion will move the proposal for the consideration of the cabinet committee of economic affairs next week. “This investment has a huge potential not only of creating employment but also integrating Indian industry with global value chains,” Commerce and industry minister Anand Sharma told ET. The Foreign Investment Promotion Board (FIPB), the inter-ministerial body that vets all foreign investment proposals, had cleared the proposal on January 21. But the proposal needs CCEA’s endorsement as it involves investment of over 1,200 crore.
The government had last year increase the FDI limit for single brand retail to 100% from 51%, but imposed several conditions on investors including many mandatory sourcing from small industry. Subsequently, it had diluted many of the conditions after IKEA expressed reservations. The 30% had to be spread over a fiver year period and could be from any supplier in India. It also stipulated a single entity for the sourcing and retailing, but the DIPP and the FIPB have allowed IKEA to have a separate sourcing arm. The company had put in its formal application, in November, 2012 after the government relaxed the single-brand retail norms in September to attract foreign flows in the sector.