Ikea spokeswoman Charlotte Lindgren said a rule preventing stores being 100 percent foreign owned was the reason behind the move.
“We have been having problems with the regulations in India so we took the decision to postpone our expansion because we want to have full ownership of our retail operations,” Lindgren told AFP, denying that the global economic slowdown had influenced the move.
Indian regulations cap foreign investment in single-brand retailers at 51 percent.
Ikea said India remained “a long term potential market” and would continue to lobby for the existing regulations to be changed.
“If and when changes are made to the FDI (foreign direct investment) regulations allowing 100 percent ownership of single brand retailers then Ikea will reconsider its position,” the company said in a statement.
The company’s comments came after India’s Economic Times reported earlier on Thursday that the Swedish company’s planned $1 billion entry into the Indian market had been put on hold after talks with the government broke down.
Ikea announced in 2006 that it wanted to open its first store in India by 2011.