Will India finally have the world famous Swedish retail IKEA stores?
Tomorrow, the IKEA's Rs 10,500-crore proposal to set up single brand retail stores in the country is on the agenda of the Cabinet Committee on Economic Affairs (CCEA).
The brand has been interested in the Indian market since the Foreign Investment Promotion Board (FIPB) cleared the investment plan of the firm to open single-brand retail stores in the country, earlier this year.
FIPB can only clear foreign investment proposals worth up to Rs 1,200 crore. Since IKEA's planned investment is higher than this, the proposal needs to be cleared by the Cabinet.
The Rs 10,500-crore proposal of the Swedish company includes stores and cafeterias. IKEA had applied to invest the amount for setting up 10 furnishing and homeware stores as well as allied infrastructure over 10 a period of years in India. 15 more stores will be subsequently opened.
IKEA has been sourcing many products from India for the past 25 years. This would be the largest investment in the single-brand retailing ever since the government has allowed foreign investment in this sector.
Earlier this month, President Pranab Mukherjee, speaking on the occasion of Golden Jubilee Celebrations of the Central Bureau of Investigation (CBI) said,“Today India is the third largest economy in the world in purchasing power parity terms."
A PwC report states that the spending power of Indian consumers is projected to be more than $1 trillion by 2021, driven by rising prosperity of emerging middle class people, whose population is expected to grow to 570 million by the time.
Swedish multinational retail-clothing company Hennes & Mauritz has also submitted a proposal to spend around 100 million euros ($130 million) to open a chain of 50 stores in India. The company’s interest in India’s potential market is fueled by India’s growing population and rising incomes.