IKEA Cleared for Market Entry Into India
May. 3 – Ikea has become the latest multinational corporation (MNC) retailer to plant its feet in the fast reforming Indian market. India’s Cabinet Committee on Economic Affairs cleared a 1.5 billion euro (US$2.4 billion) investment plan by Ikea on Thursday this week which formally paved the way for the Swedish retail giant to set up shop in Asia’s third-largest economy.
“Yes, [the Ikea investment] is cleared,” Information and Broadcasting Minister Manish Tewari said.
India’s Foreign Investment Promotion Board (FIPB), which clears foreign investment proposals in the country, gave its approval to Ikea’s investment proposal last February. However, given the significant investment amount, the proposal still needed the final approval of the federal government.
India threw open its doors to foreign retailers last year when it began liberalizing its investment rules in order to allow global supermarket chains to enter, as well as lifting an investment cap on single-brand retailers.
“This recent approval demonstrates once again that India is foreign investment friendly and offers the right market opportunities for foreign businesses to set up here,” says Chris Devonshire-Ellis, Founder of Dezan Shira & Associates and Managing Partner responsible for India. “It has taken a while for the Indian regulatory environment to reach this point, but I foresee a great number of foreign investors coming to market here, partly driven by the demands of having to service the MNCs now coming into India but also to take advantage of the consumer dynamics. India is poised to become the new foreign investment darling in the region, and it is now India’s time to shine.”
The news comes hot off the heels of Unilever committing several billion dollars to increase its equity stake in its Indian joint venture and far more upbeat news about the direction of the Indian economy, which is now set to reach 7-8% annual growth in the next 18 months.
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