The Indian government has approved an application by IKEA to open stores in India.
The plan by the Swedish furniture company to invest in India was approved in a cabinet meeting chaired by Prime Minister Manmohan Singh.
IKEA submitted its application last June. It hopes to open 25 stores in India and intends to invest almost $US2 billion (105 billion rupees).
AAP reports IKEA's entry into India is being closely watched as a test case for how a large foreign corporation might negotiate India's notorious red tape.
However, the Foreign Investment Promotion Board in January rejected 15 of IKEA's 30 product lines, including food and textiles.
AAP reports it was not clear on Thursday whether the FIPB's original limitations on food and products remain in place as part of the new deal.