New Delhi, June 22: Global furniture retailer IKEA plans to invest 1.5 billion euros (about Rs 10,500 crore) to set up 25 stores in the country.
This will be the largest investment by a global firm since the country allowed 100 per cent FDI in single-brand retail.
The Swedish company has filed an application with the Foreign Investment Promotion Board.
According to the proposal, IKEA will invest 600 million euros (Rs 4,200 crore) to open 10 stores in the first stage. The remaining 900 million euros (Rs 6,300 crore) will be used to set up 15 more stores.
Officials said the company planned to invest the sum in over 15-20 years.
The firm will be selling furniture, blankets, kitchen utensils, bathroom fittings, electrical equipment, tableware, cooking range, toys, leather articles, cosmetics, lifestyle items, consumer electronics and gadgets.
IKEA president and CEO M. Ohlsson today met commerce and industry minister Anand Sharma in St Petersburg and discussed the investment plans.
The Scandinavian firm, which already purchases products from India, will be required to source 30 per cent of its requirement from Indian small and medium enterprises under the current FDI norms. IKEA discussed its reservations regarding the sourcing norms with the officials of the department of industrial policy and promotion in St Petersburg before taking the investment decision, officials said.
Sources said the government was drawing up plans to ease the FDI norms.
Earlier this year, the government had lifted the restrictions on global chains such as Adidas, Louis Vuitton, Gucci and Nike and allowed them to set up stores with full ownership.
However, the Centre had made it mandatory for these firms to source at least 30 per cent of their goods from domestic small and cottage industries having a maximum investment of $1 million (about Rs 5 crore) in plant and machinery.
The $1-million cap posed a hurdle for global players as they felt they would have to scout for new firms whenever this limit was breached.
Commerce ministry officials said, "Several global players have reservations to this cap, while they had little issue about the mandatory sourcing. They indicated that funding the units for technology upgradation and capacity addition could breach the norm."
"We could consider allowing the retailers to continue sourcing from small and cottage industries even after they benefit from their association with global players," they said.