The Indian government is allowing foreign single-brand retailers like Sweden-based IKEA and U.S.-based Starbucks to open stores in the country without local partners.

Tuesday's decision allows such companies to own 100 percent of stores in India, previously capped at 51 percent. The single-brand retailers will need to source 30 percent of their goods from smaller Indian industries and artisans.

The measure is part of a set of economic reforms proposed by Indian Prime Minister Manmohan Singh's government to modernize India's retail sector.

The government last month suspended a major reform to allow multi-brand foreign chains, like U.S.-based Walmart, to open in India.

Opponents said allowing foreign supermarkets into the Indian market will threaten the survival of millions of small shop owners.

India's $450 billion domestic retail market is dominated by family-run stores and global retail companies have waited years for India to allow them to operate in the country.

IKEA has been keen to open its furniture stores in India, but was waiting for the restrictions to be eased.