“The proposal wasn’t cleared today. More clarity is needed,” a senior official at India’s Department of Industrial Policy and Promotion told The Wall Street Journal.

The official didn’t give further details, but confirmed that he attended a Foreign Investment Promotion Board meeting which studied the IKEA proposal.

The market and industry watchers had expected the FIPB to clear the proposal Monday, with several indications over the past couple of weeks suggesting that the plans would be passed quickly.

This is the second time that the FIPB is taking up IKEA’s proposal.

The board, while initially clearing the investment proposal last month, had imposed conditions which would curtail the company’s product offerings in India.

It said the company won’t be allowed to sell products that it doesn’t brand, including secondhand furniture, textile goods, toys, books and consumer electronics, according to government officials familiar with the matter.

IKEA then wrote to the Indian government, saying that–in keeping with what it calls the “IKEA concept” — the company must be allowed to retail all of its products in India and run in-store restaurants, as it does in every country where it operates.

Trade Minister Anand Sharma last week indicated that IKEA’s stores in India would be allowed to follow the global model.

Once the FIPB approves IKEA’s proposal, it will have to go to the federal cabinet for final approval.

The board is required to send all investment proposals of more than 12 billion rupees, or $219 million, to the cabinet.

IKEA is among the few foreign retailers which have sought permission to open wholly owned stores in India after New Delhi last year allowed 100% foreign ownership in single-brand retail ventures, where a company sells only its own brand of goods.

Previously, foreign companies could own a maximum 51% stake in such retail operations.

As part of financial reforms in the retail sector, the Indian government in September also changed foreign investment rules to allow foreign supermarkets to set up retail outlets through joint ventures.

Previously, foreign companies could operate only wholesale businesses in the multibrand segment.

IKEA’s proposal to set up 25 stores in India, if implemented, would be the largest investment in India by a global company.

U.K.-based Pavers England is the first foreign retailer to be allowed to set up wholly owned stores in India. The FIPB had in October cleared a $20 million investment proposal from the footwear company.

IKEA didn’t comment on the latest development.

NEW DELHI—The IKEA Group's 1.5 billion euro ($2 billion) proposal to open stores in India--one of its largest untapped markets--hit a bump Monday with the country's foreign investment board asking the Swedish retail giant for some clarifications.

"The proposal wasn't cleared today. More clarity is needed," a senior official at India's Department of Industrial Policy and Promotion told The Wall Street Journal.

The official didn't give further details, but confirmed that he attended a Foreign Investment Promotion Board meeting which studied the IKEA proposal.

The market and industry watchers had expected the FIPB to clear the proposal Monday, with several indications over the past couple of weeks suggesting that the plans would be passed quickly.

This is the second time that the FIPB is taking up IKEA's proposal.

The board, while initially clearing the investment proposal last month, had imposed conditions which would curtail the company's product offerings in India.

It said the company won't be allowed to sell products that it doesn't brand, including secondhand furniture, textile goods, toys, books and consumer electronics, according to government officials familiar with the matter.

IKEA then wrote to the Indian government, saying that--in keeping with what it calls the "IKEA concept" -- the company must be allowed to retail all of its products in India and run in-store restaurants, as it does in every country where it operates.

Trade Minister Anand Sharma last week indicated that IKEA's stores in India would be allowed to follow the global model.

Once the FIPB approves IKEA's proposal, it will have to go to the federal cabinet for final approval.

The board is required to send all investment proposals of more than 12 billion rupees, or $219 million, to the cabinet.

IKEA is among the few foreign retailers which have sought permission to open wholly owned stores in India after New Delhi last year allowed 100% foreign ownership in single-brand retail ventures, where a company sells only its own brand of goods.

Previously, foreign companies could own a maximum 51% stake in such retail operations.

As part of financial reforms in the retail sector, the Indian government in September also changed foreign investment rules to allow foreign supermarkets to set up retail outlets through joint ventures.

Previously, foreign companies could operate only wholesale businesses in the multibrand segment.

IKEA's proposal to set up 25 stores in India, if implemented, would be the largest investment in India by a global company.

U.K.-based Pavers England is the first foreign retailer to be allowed to set up wholly owned stores in India. The FIPB had in October cleared a $20 million investment proposal from the footwear company.

IKEA didn't comment on the latest development.