India is poised to approve furniture retailer Ikea's application to open stores as the nation seeks to lure more investment.
India poised to allow Ikea to open stores
NEW DELHI // India is poised to approve furniture retailer Ikea's application to open stores as the nation seeks to lure more investment, the commerce minister said yesterday.
Ikea's proposal to invest as much as 42 billion rupees (Dh2.84bn) in outlets selling items ranging from sofas and cutlery to hot dogs is awaiting a fresh approval from officials. The Swedish chain has sought clarification on whether it can sell the same types of products in India as overseas, posing a test of the nation's commitment to implementing policy overhauls aimed at reviving inflows to boost a struggling economy.
"Our focus is on attracting foreign direct investment," Anand Sharma, the minister, said. "2012 has not been an easy year for us, and we hope 2013 will be better because the decisions we have taken will lead to an increase in FDI."
The government of the prime minister, Manmohan Singh, in January 2012 allowed full foreign ownership of stores selling a single brand. Ikea, the world's largest furniture retailer, is seeking to tap demand in the second-most populous nation.
"It is our understanding that we will hear back about the application next Monday," the Ikea spokeswoman Ylva Magnusson said. "Until we hear back from them, we cannot comment further."
India's ruling coalition in September permitted overseas retailers such as Walmart to set up multibrand supermarkets, part of a package of policy changes to spur growth. That step cost Mr Singh his majority in parliament after some lawmakers said family-run stores will have to close.
The prime minister mustered enough support to win votes in the legislature in December on the plan to permit the entry of foreign supermarkets.
Mr Sharma said retail liberalisation was now "cast in stone".
India's Foreign Investment Promotion Board first approved Ikea's application on December 21, and it is being reconsidered after Ikea asked for more information.