The government said it would allow foreign retailers that sell just one brand of products — a group that would include companies like Ikea, Gap, Apple and Starbucks — to open wholly-owned stores in India, up from a maximum of 51 percent ownership now, if they met certain strict conditions. Many foreign chains, most notably Ikea, which buys a lot of furniture and furnishings from India, have not opened stores in the country because they did not want to take on Indian partners.

The decision follows a series of steps Indian officials took in recent weeks to bolster flagging investor confidence and increase foreign capital flows to support its slowing economy and the falling rupee. This month, for instance, policy makers allowed individual investors in other countries to invest directly in the Indian stock market, rather than being required to go through intermediaries like offshore funds.

Last month, many investors, foreign and domestic, said they were deeply disappointed when the government led by the Congress Party quickly reversed a decision to allow 51 percent foreign investment in multibrand retailing — a category that covers companies like Wal-Mart Stores, Tesco and Carrefour. Many had seen the decision to allow foreign retailers as a welcome spurt of free-market initiative by a government that has resisted such change in its seven-year tenure.

But many Indian political leaders, including some members of Congress and its allies, opposed allowing foreign retailers into the country, saying they would decimate small shopkeepers and wholesale traders that employ about 34 million people. Much of that criticism
was aimed at so-called big-box retailers like Wal-Mart Stores, which has a wholesale business in India.

The decision Tuesday to further open up single-brand retailing to competition, which officials had signaled
in early December, suggests that Prime Minister Manmohan Singh and his aides believe there will not be significant political resistance to niche foreign retailers, which will by and large cater to the middle and upper classes of Indian society rather than to the masses.

Still, the approval comes with some strict conditions that might be difficult for some companies to meet. Among them is a requirement that single-brand retailers buy 30 percent of the value of their products from small Indian businesses and artisans that have invested less than $1 million in plants and equipment. If, over time, the suppliers grow and invest more than that sum they will no longer be counted against the 30 percent minimum requirement. Previously, some analysts said that such a purchasing condition would violate World Trade Organization rules, which apply to India.

The new rules also say that investors wishing to own 100 percent of single-brand stores must own the brands that their stores sell, which would preclude franchisers. Another requirement would block companies from rebranding related goods made by others.

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