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Ikea clears major hurdle in India expansion bid

Ikea clears major hurdle in India expansion bid

Published: 22 Jan 2013 07:19 GMT+01:00
Updated: 22 Jan 2013 07:19 GMT+01:00

India's foreign investment panel has cleared a nearly $2-billion plan by Swedish furniture giant Ikea to open its stores in the country as it seeks new markets for its flat-pack products.

Two months ago, the Foreign Investment Promotion Board rejected 15 of Ikea's 30 product lines, including food and textiles, underscoring the regulatory hurdles faced by foreign stores hoping to enter the Indian market.

But late on Monday, commerce minister Anand Sharma said that the investment board had cleared the plan.

"This is a positive development," Sharma said.

"The government is committed to playing a constructive role in encourage foreign direct investment.

Ikea had told the Indian government the company must be allowed to retain its "global model" in India, retailing all of its products and running its in-store restaurants as it does in every country where it has operations.

Reacting to the announcement, Ikea said the clearance of its proposal by the foreign investment panel "as per the Ikea concept" was "an important milestone in the application process".

"We consider this as a very positive development," Juvencio Maeztu, Ikea country manager, said in a statement.

"We are now waiting for approval from the cabinet and subsequently a notification so that we can initiate the process of establishing Ikea stores in the country," Maeztu said in a statement.

Clearance from the Indian cabinet was expected to be forthcoming after the commerce minister said late last month that "we accept their global model" and "we see no reason why their global model has to be changed in any manner."

Ikea's entry into India -- it has pledged to invest $1.9 billion in coming years -- is being closely watched as a test case for how a large foreign corporation negotiates India's byzantine rules and red tape.

The government in September announced a string of pro-market and investor-friendly reforms that relaxed or removed barriers to foreign retailers.

Ikea, which submitted its application last June, hopes to open 25 of its stores in India through a 100-percent owned unit, Ingka Holding, as part of a wider push into emerging markets such as China and Russia.

Ikea, which in 2009 scrapped plans to enter the market due to regulatory concerns, says it has a "long-term vision" for India and sees huge potential in its burgeoning middle class.

AFP/The Local/dl

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Your comments about this article

08:00 January 22, 2013 by antony6661
Indians WELCOMES IKEA to India. But Please do not pay our Indian Minsters & middle men bribes. India is the MOST Corruupt coutnry & Indian Govt is the most greedy & filty govt any where in the world. They have robbed the poor indian for the last 65 years and reduced over 500 million indinas to begger status. Eventually the corruption & bribes will come out. Below is some scams & loot from Indian & gone to swiss & other banks.

Rudolf Elmer has givne 2000 names . The source of income is from corruption, illegal activities, drug deal, fake project. The deposits in Swiss Bank was started from early 70s. Major share of Indian black money routed from Pakistan.

LOOTED INDIAN MONEY in Swiss banks, other tax havens & invested abroad: about $100-150 trillion. IGI Airport scam = $32 billion(FC) Coal Mining Scam = $213 billion(FC) Karnataka Wakf Board Land Scam = $39 billion(FC) Andhra Pradesh land scam = $20 billion(FC) Service Tax and Central Excise Duty fraud = $3.82 billion(FC) Gujarat PSU financial irregularities = $3.39 billion(FC) Maharashtra stamp duty scam = $126 million(FC) Highway scam = $13.97 million(FC) Ministry of External Affairs gift scam = $100,000(FC) Himachal Pradesh pulse scam = $200,000/month(FC) Flying Club fraud = $38 million(FC) Jammu and Kashmir Cricket Association scam = $10 million (MC) Punjab paddy scam = $3.59 million(FC) Arvind Joshi and Tinu Joshi = $50 million(FC) Uttar Pradesh seed scam = $9.98 million(FC) (2011 - 1948) Obsolete French Fighter Jets = $11 billion(FC) NHRM = $2 billion(BC) Goa mining scam = $700 million(FC) Noida Corporation farm land scandal = $40 million(SC) Bellary mines scandal = $3.2 billion(FC) BL Kashyap EPFO Scam = $118 million(FC) Hasan Ali Khan = $8 billion(MC) ISRO-Devas = $300 million(FC) Cash-for-votes = $715,000(FC) 2G spectrum scam/Radia Tapes = $6.9 billion(BC) Adarsh Housing Society(FC) Commonwealth Games = $15.5 billion(FC) LIC Housing Loan scam = $200 million
12:05 January 23, 2013 by Adnan M
@antony6661, it's hard to understand why you guys cannot live without mentioning Pakistan for the responsible of each bad thing happening in India. The list you have given has nothing to do with Pakistan. Black money does not have to be travel via Pakistan. It can go directly where it wanna reach.
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