IKEA has taken another key step towards establishing itself in India. Foreign Investment Promotion Board (FIPB) has, approved the company’s investment proposal to establish single-brand retail stores in India. FIPB has forwarded the proposal to the Cabinet Committee on Economic Affairs (CCEA) for consideration and final approval.
IKEA, is the leading Swedish furniture maker, well known for its ready to assemble quality furniture. Earlier in 2012, the company had expressed its intentions to invest Rs. 10500 Crore (approx $ 2 Billion), in its retail foray in India.
The company proposed to set up 25 fully owned company stores over a period of next 10 – 15 years. IKEA’s entry would be the largest investment in the single brand retail ever since FDI has been allowed in the sector.
The notified norms for FDI, earlier specified that wholly owned international brands would need to source 30 % of their requirements locally, a norm that expected to boost and create opportunity for for suppliers in SME sector. This norm of 30 percent sourcing was relaxed in September 2012, post certain concerns raised by IKEA. Subsequently IKEA had placed a formal application for approval.