Ikea cannot retail food items in India

Global furniture major Ikea will be allowed to run cafes and restaurants within its singlebrand stores in India but not retail packed food items off the shelf in any other part of such stores, Parliament was informed on Monday.

The Swedish company had sought permission for singlebrand retail trading of 'Ikea' products, including setting up of Ikea restaurants and cafes and Ikea Swedish food market (to sell only single-brand IKEA products), commerce and industry minister Anand Sharma said in a written reply to the Lok Sabha.

The proposal has been recommended by the foreign investment promotion board (FIPB) to the extent that Ikea can have a restaurant/cafe in accordance with its global model, but cannot engage in retailing of food items, the minister added.

Accordingly, the following condition has been proposed: food and beverages to be sold within Ikea restaurant/cafe located in the Ikea retail store; no food items shall be retailed off the shelf in any other part of the retail store, Sharma clarified.

Though the world's largest furniture-maker had received FIPB approval for its Rs 10,500-crore proposal, it now has to be approved by the Cabinet Committee on Economic Affairs (CCEA). All proposals involving an investment of over Rs 1,200 have to be finally approved by the CCEA.

Sharma also said that some foreign companies had requested for permission to sell food items as part of their proposal on foreign direct investment (FDI)in single-brand retail trading.Marks & Spencer sought approval to sell Marks & Spencer branded long-life processed foods such as chocolate, confectionery etc. The proposal was rejected on January 9, 2009, as retailing of food items is not permitted in the policy on FDI in single-brand retail, Sharma clarified.

The government had raised the FDI cap in single-brand retail to 100 per cent from 51 per cent last year subject to the domestic sourcing clause as part of the economic reforms process. Following this, it received applications from UK-based show company Pavers England and Ikea.

Courtesy: Mail Today