By James Lamont in New Delhi

Ikea is putting on hold its entry into India in spite of New Delhi?s move to open its market to foreign retailers. The decision comes as the Swedish company accelerates its expansion in other Bric countries.

Mikael Ohlsson, chief executive, told the Financial Times that India?s requirements for single-brand retailers to source 30 per cent of their goods from local small and medium-sized companies was an obstacle to its investment that needed review.

Mr Ohlsson said the outright ownership of operations granted to foreign single-brand retailers this month was ?a very positive change?. But he warned that the conditions applied to local sourcing were ?concerning? and more easily met by food retailers than single-brand companies with established, global product ranges.

Ikea is building a presence quickly in leading emerging markets. Last year, its fastest sales growth was in China and Russia. The world?s largest furniture retailer is tripling its rate of expansion in China to three stores a year, and is seeking to open more stores in Moscow in the year ahead.

Mr Ohlsson said Ikea, which operates in 26 countries, wanted clarity on restrictions on entry to India, one of the most promising consumer markets. He proposed that the Indian government consider refinements to meet political requirements, like granting a ?grace period? before reaching sourcing targets.

?We need to see what [the restrictions] will mean for us,? Mr Ohlsson said. ?We are patient because the

conditions need to be right. When everything seems to be okay, then we will be in.?

Ikea has plans to double what it sources from India to 1bn euros a year within three years.

India?s opposition leaders have claimed that greater foreign direct investment in the retail sector in Asia?s third-largest economy would not create new jobs or reduce prices.

They argue that it would, instead, deepen poverty and put lots of local traders out of business.

Arun Jaitley, a leader of the Bharatiya Janata party, warned that opening retail to foreign companies before India had strengthened its own manufacturing sector would lead to an influx of cheap Chinese goods.

Gitanjali Gandhiok, principal at Odgers Berndtson, an executive search company in Delhi, said it would be ?self-destructive? for India not to allow modern retail to flourish.

? The Financial Times Limited 2012