"The proposal will now be placed before the Cabinet Committee on Economic Affairs (CCEA) for final approval," sources said.
The Foreign Investment Promotion Board (FIPB), the nodal agency for approving FDI proposal, had earlier permitted IKEA to invest Rs 4,200 crore for opening single-brand retail stores.
With today's FIPB approval, IKEA would be able to open cafeterias in their stores.
"IKEA's case for investment is cleared, which is a positive development. The government is committed to playing a constructive role in enhancing FDI (foreign direct investment) , especially in areas which create jobs and provide technological enhancement," Commerce Minister Anand Sharma said.
IKEA had originally sought approval for investing up to Rs 10,500 crore in the country. Following the part approval, the company made a representation to the (DIPP), which forwarded the request to FIPB seeking a review of its November 20 decision.
IKEA Group, which manufactures and sells home and office furnishing products, proposes to invest in single-brand retail trading in India through a 100 per cent subsidiary.
The Swedish furniture major's proposal was withdrawn from the agenda of the meeting on December 31 of the FIPB, as more information was sought from the company regarding its FDI plans in India.