Swedish furniture retailer Ikea has signed a memorandum of understanding with Telangana government to open in the state.

The memorandum, signed by Ikea CEO Juvencio Maeztu and Telangana government special chief secretary industries Pradeep Chandra, will enable Ikea to open its first Indian store in Hyderabad, the state’s capital.

Ikea’s proposal to invest US$2 billion to open 25 stores across the country was approved by the Indian government in May 2013 under the liberalised FDI policy.

“The decision by Ikea to set up its first store in Hyderabad will place Hyderabad on the international map of Ikea stores. Ikea retail outlets have a standard design and each location entails an investment of $100 million (Rs 500 crore-Rs 600 crore). In addition, the backward integration of supplier linkages will have a tremendous economic impact on the state,” said a release from the government.