India defends its IKEA rebuff

MUMBAI Sat Nov 24, 2012 4:55pm IST

The sign of an IKEA furniture store is seen in Berlin, November 16, 2012. REUTERS/Thomas Peter

The sign of an IKEA furniture store is seen in Berlin, November 16, 2012.

Credit: Reuters/Thomas Peter

Related Topics

MUMBAI (Reuters) - A top government official on Saturday defended India's decision to permit IKEA to sell only furniture products in the country, curtailing the Swedish retailer's investment plans in a fast growing consumer market.

The Foreign Investment Promotion Board (FIPB), which clears foreign investment proposals in the country, approved on Tuesday IKEA's 1.5 billion euros investment plan on conditions that the retailer would operate only in its core business.

"It's a single brand approval. So they can sell those items which they can brand," Arvind Mayaram, economic affairs secretary at the finance ministry and one of the members of the FIPB, told reporters.

"Whatever they can brand, they have been permitted to."

The cabinet needs to approve the decision of the FIPB before it comes into effect.

On Friday, local newspapers reported that IKEA had been forbidden from selling any food or drinks and other items including textile products and office supplies.

It is not yet clear whether product restrictions will delay or alter IKEA's investment plans in the country. The retailer has said it will review the details of the approval once they are made public.

The government has presented IKEA's planned entry as a sign that foreign investors have kept faith with Asia's third-largest economy, at a time when growth has declined and political protests have erupted over expansion by foreign firms.

India has thrown open its doors to foreign retailers this year, liberalising investment rules to allow in global supermarket chains and as well as lifting an investment cap on single-brand retailers such as IKEA.

But the rule changes have provoked a furious backlash from some political parties and domestic retailers, a reaction which threatens to derail a package of pro-market reforms aimed at reviving growth.

(Reporting by Kaustubh Kulkarni; Writing by Rajesh Kumar Singh, editing by William Hardy)

FILED UNDER:

Aviation

REUTERS SHOWCASE

Global Economy

Global Economy

EU leaders agree investment package to boost economy.  Full Article 

Oil Prices

Oil Prices

Brent steady below $60, heads for 4th weekly decline as oversupply persists.  Full Article 

Chinese Economy

Chinese Economy

China revises up size of economy in 2013 by 3.4 percent.  Full Article 

Reuters Exclusive

Reuters Exclusive

Google aiming to go straight into car with next Android – sources.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage