Coinciding with the din in Parliament over the government permitting 51 per cent foreign direct investment in multi-brand retail, single-brand retail would run into a rough patch too, if IKEA reviews its India entry plans over the fresh barriers thrown up by the FIPB.
It is believed many single-brand retail chains, including some from Europe, have been waiting for the green signal to the big-ticket IKEA proposal as a test case, before they send in their applications.
Industry sources pointed out that IKEA, which operates over 300 stores across around 40 countries, typically goes out to foreign markets with its full range of products and categories, and with so many categories deleted from its list, the chain might rethink on whether to enter the India market or not.
But replying to Business Standard, IKEA said, "We are now internally reviewing the details of the latest decision from FIPB."
The company said it would be in a position to comment on its India stand "when we are more clear about what it means for us in the coming days".
The IKEA proposal was taken up by FIPB, a key wing in the finance ministry, for vetting foreign investment proposals, on Thursday.
Officials said the IKEA intent to invest ^1.5 billion in India to set up stores across the country was recommended for clearance by the FIPB, but with conditions attached.
Even as the earlier condition of 30 per cent sourcing from small and medium enterprises was removed from the single brand retail FDI policy following IKEA's stand that it was not feasible to follow, the new set of conditions recommended by FIPB may upset its plans.
The category of items that FIPB has taken out of the list of what all IKEA can do in India include home and office use products, solutions, fittings, furnishings and accessories including stationery; textile products including apparels and fabrics; toys, books and gadgets; consumer electronics and accessories; decorative products; leather products; storage and sorting products and accessories; cleaning products and accessories; children products and accessories; safety-related products; travel-related products; cosmetics and accessories; gift articles and accessories; lifestyle products and accessories; beach products and accessories; recycling solutions and products; food and beverages to be served at the IKEA restaurants and café
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