On-board PM's aircraft, Oct 28: The government is considering permitting 100% FDI in single-brand retail that will pave the way for Swedish company IKEA to finally set shop in India. India allows up to 51% FDI in single-brand retail.
Commerce & industry minister Anand Sharma said IKEA had asked the government to hike the FDI limit in single-brand retail. "IKEA sources almost 30% of its products from India. It will create jobs in India. The government is considering it," he said on route to Hanoi from Kuala Lumpur, on board the Prime Minister's aircraft.
In 2009, IKEA had planned to open stores in India with an investment of about $1 billion, but the government's 49% FDI ceiling held it back. The Swedish company sources $655 million worth materials and products from India. IKEA is not keen on setting up a JV by roping in an Indian partner with 49% stake since that is not its usual business model.
IKEA's CEO Mikael Ohlsson met Sharma last month and sought further liberalisation of ownership norms in single-brand retail.
As far as FDI in multi-brand retail is concerned, Sharma said the government has received response from stakeholders on the discussion paper it floated. Sharma said FDI in multi-brand retail would bring investment and technology, build infrastructure and provide employment to rural people.
"Policy formulation is always calibrated," Sharma said, but added India needs to build the entire value chain in retail. India is the largest producer of grain and the second-largest of fruit and vegetables. Of the total 235 mt, vegetables account for 190 mt. "But almost 35% is lost," he said, indicating huge investments are required in the backend, refrigeration and cold chains.

Name - Rakesh prasad
PGDM-1st (2010)