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:

Reuters Showcase

Land Ordinance

Land Ordinance

Modi says willing to make changes in land decree  Full Article 

Sahara Woes

Sahara Woes

SEBI cancels Sahara's portfolio management licence  Full Article 

Gold Demand

Gold Demand

India gold demand muted, eyes cut in import duty  Full Article 

Coffee's Hot

Coffee's Hot

IPO could value Cafe Coffee Day at $1 billion  Full Article 

Sahara Salaries

Sahara Salaries

Some staff say Sahara has not paid salaries for months   Full Article 

DLF Fined

DLF Fined

DLF says reviewing $8.4 million SEBI penalty  Full Article 

Rail Budget

Rail Budget

Breakingviews - India goes back to future with $137 bln rail push  Full Article | Full Coverage 

Clean Energy

Clean Energy

India says clean energy a $160 billion opportunity over five years  Full Article 

Global Markets

Global Markets

Global investors lift exposure to stocks as major markets touch record highs  Full Article 

Reuters India Mobile

Reuters India Mobile

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