Mikael Ohlsson, president and chief executive of Swedish home furnishing major IKEA, had said at the time of India increasing foreign direct investment (FDI) in single-brand retail from 51 per cent to 100 per cent, that the conditions will attract only food chains and not retailers like IKEA.

Following the announcement of the big ticket investment proposal for the country, the company has been able to get concessions from the Indian authorities on various regulations including the 30 per cent local sources rule. The company had said that coursing 30 per cent of the sales value from the Indian small industries sector is not possible.

The Department of Industrial Policy & Promotion (DIPP) of the government of India has accepted several key demands of the company. The officials have agreed to relaxation of the 30 per cent mandatory sourcing requirement from the beginning of its operations. The department has also accepted the definition of `small scale' sector of the company that has to mandatorily source products under the rules for 100 per cent foreign direct investment in single-brand retailing.

The officials have hinted that they might allow the company to operate retailers under names that are different from the one applying for the permits to enter the country. The authorities might also exclude `taxes and duties' while defining the value of products that are compulsorily sourced locally. The series of concessions will allow the move to speed up its investment plans and might send a positive signal to foreign investors about investing in the country.

The government had allowed foreign investment in single brand retail in January this year.