Swedish fashion retailer Hennes & Mauritz (H&M) has applied for permission to set up 50 stores in India with an initial investment of 100 million euros (about Rs 700 crore) under the single-brand retail format.

The world’s second-biggest fashion retailer is the second Swedish firm which is planning to enter the lucrative Indian retail market.

Furniture retailer IKEA has already won approval from the Foreign Investment Promotion Board (FIPB) and its Rs 10,500 crore proposal will be taken up for final approval by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday.

The FIPB can vet proposals up to Rs 1,200 crore and anything above that amount has to be referred to the CCEA.

The government is desperately trying to attract foreign capital to plug a widening current account deficit. The single-brand retail format has attracted better interest than the multi-brand format.

The government has opened up the multi-brand retail sector to global retailers who can now enter the domestic market with 51% equity in partnership with an Indian company. But it has been left to states to implement the policy which has deterred global retailers from making an entry. Several opposition-ruled states have opposed the move to open up the multi-brand sector.

Commerce, industry and textiles minister Anand Sharma said the government was committed to economic reforms. “After the liberalization of FDI policy in single-brand retail, there has been considerable interest shown by all global retail majors,” Sharma said while welcoming the H&M proposal.

“The government remains committed to liberal economic reforms agenda. We view foreign investments as a source of technology, finance and means of creating gainful employment in the country,” he said referring to the H&M proposal. IKEA’s country manager for India Juvencio Maeztu met Sharma on Monday but details were not available.

The Swedish furniture retailer had unveiled plans to set up shop in India after the government eased rules to allow 100% foreign investment in the single-brand retail segment. The retailer has been sourcing from India for the past several years.

It aims to invest over Rs 10,500 crore over a 10-year period to set up its stores. After some initial delays, the government allowed IKEA to set up its signature cafes within the stores.