New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved Swedish furniture retailer IKEA's plan to invest Rs 10,500 crore for a single brand retail venture in India, making it the largest investment to be made by a foreign brand in the Indian retail sector.
The approval comes as the final go-ahead for the retail giant to set up shop in the country after it had submitted its application for an India entry early last year. The 25 billion euro company had received the Foreign Investment Proposal Board's (FIPB) nod in February this year.
"This is a very positive development...India is an important market for the IKEA Group from a sourcing perspective. We have been active in the country for more than 25 years and will continue to increase our sourcing in India from both existing and new suppliers building on long term relations and shared values," said Mikael Ohlsson, president and CEO, IKEA Group.
The company, which has been sourcing products approximately worth $450 million from India as of 2011, said it has growth plans to exceed $1 billion over the next few years with a target of setting up 10 stores over 10 years and around 25 stores over a longer time period.
While the government has allowed the furniture chain to run cafes and restaurants within its single brand stores, the brand will not be permitted to sell food items inside the stores, commerce minister Anand Sharma had said last month.
"Today's decision of CCEA to allow foreign investment proposal of IKEA is indeed a historic one. This will be the biggest foreign investment in the retail segment till now and will provide an opportunity to Indian small and medium enterprises in a wide range of labour intensive sectors for integrating into global value chain," Sharma said.
ETF for PSU stocks gets approval
MUMBAI/NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Thursday cleared the government proposal to set up an exchange traded fund backed by a basket of PSU stocks, commonly referred as CPSEETF. The government plans to float such a fund so that, among other benefits, PSU divestments could be carried out in a much less disruptive manner for the market and can also incentivize retail investors. An empowered group of ministers would take this forward, the government said in a release. The CPSEETF will constitute a basket of shares of different PSUs which would track an index, but will trade like a stock on the exchange. ICICI Securities is the adviser to the ETF and Goldman Sachs is learnt to be the fund manager. The release on CPSEETF noted that each stock would have a fixed weightage in the basket and the ETF will give discount to investors. Selling a mutual fund at a discount to its NAV is a new concept in the Indian market, and would require some rule change by the market regulator Sebi, mutual fund industry veterans pointed out.
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