The Finance Ministry is expected to take a decision next month on Swedish home furnishing major IKEA's proposal to invest Rs 10,500 crore (Rs 105 billion) to set up single-brand retail stores in the country.
"We are examining IKEA's proposal. We will forward it to Foreign Investment Promotion Board (FIPB), which will take it up next month and take a decision," a senior official in the Department of Industrial Policy and Promotion (DIPP) told PTI.
The official said after FIPB's clearance, the proposal will have to be finally approved by the Cabinet Committee on Economic Affairs (CCEA) as the board can clear investment applications worth up to Rs 1,200 crore only (Rs 12 billion).
The 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.
This would be the largest investment in the single-brand retailing ever since the government has allowed foreign investment in this sector in January.
With the government relaxing the mandatory 30 per cent sourcing clause in September, IKEA which had earlier expressed concerns over the issues, had filled its final application earlier this month.
Recently, the FIPB has cleared foreign investment proposals of three single-brand retailers, including that of British footwear retailer Pavers England, to open fully owned stores.
It has also approved a 51 per cent joint venture of American luxury clothing retailer Brooks Brothers and Italian jewellery maker Damiani's plan to form a venture with Mehta's Pvt Ltd.
Further, as per the proposal, IKEA would be investing 600 million euros (Rs 4,200 crore) to open 10 stores in the first stage. The remaining 900 million euros (Rs 6,300 crore) would used to open 15 more stores.
The Scandinavian company through its retail outlets would be selling products like furnitures, blankets, kitchen utensils, bathroom fittings, electrical equipment, tableware, cooking range, toys, leather articles, cosmetics, life style items, consumer electronics and gadgets.