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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

School Shooting

School Shooting

Two killed, four wounded in Washington state school shooting.  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

Special Report

Special Report

Why Madrid's poor fear Goldman Sachs and Blackstone  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

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