The government on Thursday formally allowed Swedish furniture major IKEA to invest Rs 10,500 crore for setting up single brand retail stores to sell mostly home furnishing items.
"Whatever proposal of IKEA was there has been cleared," Information and Broadcasting Minister Manish Tewari told reporters after the application was cleared by the Cabinet Committee on Economic Affairs headed by Prime Minister Manmohan Singh.
IKEA has proposed setting up 10 furnishing and homeware stores as well as allied infrastructure in over 10 years in India by investing about Rs 10,500 crore. Subsequently, it plans to open 15 more stores.
The global furniture major has also been allowed to run cafes and restaurants within its single brand stores in India, but it cannot sell packed food items.
IKEA can sell food and beverages at its restaurants/cafes located within its stores.
The IKEA proposal was earlier cleared by the Foreign Investment Promotion Board (FIPB), but since the proposed investment was more than Rs 1,200 crore, CCEA approval was needed.
As of now, IKEA's will be the largest investor in the single-brand retailing ever since the government allowed foreign investment in this sector. The company has been sourcing many products from India for the past 25 years.
Welcoming the approval, IKEA said "this is a very positive development" and promised to offer good quality home furnishing products and solutions at affordable prices.