Swedish furniture retailer IKEA has said it has filed the final documents with the Government relating to its investment proposals in accordance with the amended policy.
The company, which plans to invest about €1.5 billion (Rs 10,500 crore) to set up 25 stores, had to re-file its application with the Foreign Investment Promotion Board as the Government had tweaked the norms on investments in single-brand retail.
“The Government had asked for some clarifications and we had sent our responses this week,” a company spokesperson said.
Last month, the Government had tweaked sourcing norms for FDI exceeding 51 per cent in single-brand retail and diluted the previous condition to source 30 per cent of requirements. As a part of the modifications, the Government had said foreign firms, which want a relaxation of the 30 per cent procurement norms, would have to set up manufacturing facility in India.
The company had earlier raised concerns regarding the mandatory 30 per cent sourcing clause from small and medium industries, leading to delay in its applications.
In a statement, Mikael Ohlsson, President and CEO of the IKEA group, said, “IKEA Group views the recent developments related to FDI in single-brand retail positively. We believe the current policy guidelines support the business needs of many single-brand retailers and will benefit consumers as well as the development of many suppliers and producers in India.”
Stating that India is an important market for IKEA both from a retail and a sourcing perspective, he said, “After 25 years of sourcing many IKEA products in the country, IKEA Group has, as of end June this year, submitted its application to start retail operations in India and has filed the final document this week in accordance with the amended policy”.
The Department of Industrial Policy and Promotion had earlier asked IKEA to send a comprehensive reply.
Ohlsson said, “Once our application is approved we will develop a solid plan for the establishment of IKEA stores for many years to come, generating investments and new employment.
At the same time, we will continue to increase our sourcing in India from both existing and new suppliers building on long-term relations and shared values.”
IKEA is currently working with 70 suppliers and 1,450 sub-suppliers.