New Delhi, May 3 (KNN) Swedish home furnishing and furniture giant IKEA's existing outsourcing from India worth about Rs 2,500 crore for its worldwide stores, will not be accounted for while calculating its 30 per cent outsourcing requirement for its Indian stores.

The Cabinet Committee on Economic Affairs (CCEA) yesterday cleared IKEA's Rs 10,500-crore foreign direct investment proposal paving way for the company to open 10 stores in India in the initial stages.

In case of a single brand retailer which wants to operate in India with 100 per cent equity, there is a requirement that the global chain must source at least 30 per cent of its merchandise from the domestic sources so that the local industries get a boost.

IKEA which has been outsourcing from India for long, wanted that its existing outsourcing business should be taken into account while working out its domestic outsourcing obligation. However, the government stood its ground and the Swedish company agreed, officials said.   

IKEA, which has already been sourcing products from India over the last 25 years, initially plans to set up 10 furnishing and home ware stores over a period of ten years.
However, while IKEA has been allowed to run cafes and restaurants within its single brand stores in India, it cannot sell packed food items.
 
Commerce and industry minister Anand Sharma called the decision 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," he said in a statement after the cabinet committee on economic affairs (CCEA) cleared the proposal. 

"This is a very positive development.  Since many years already, India is an important market for the IKEA Group from a sourcing perspective," IKEA Group President and CEO Mikael Ohlsson said.  (KNN)