UPDATE 1-IKEA shelves plan to enter India

* Cites foreign investment rules

* India still seen as a long term potential market

(Recasts with IKEA comment)

NEW DELHI/STOCKHOLM, June 11 (Reuters) - Sweden's IKEA [IKEA.UL], the world's biggest furniture retailer, will stay out of India as long as the country doesn't allow full foreign ownership of single-brand retailers, it said on Thursday.

India is an enormous potential market for retailers but it only allows a maximum of 51 percent foreign investment in single-brand retailers.

"As far as retail development in India is concerned, the IKEA Group has postponed any decision to enter the market due to the fact that regulations have not been changed to allow IKEA to fully own its retail operations," the budget furniture maker said on an email.

Its comments came after Indian media reports said it had called off a $1 billion investment plan due to the restrictions.

"India is still seen as a long term potential market for IKEA and we will continue to press for changes to the existing regulations," the company said.

"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."

Earlier the Economic Times, citing unnamed IKEA officials, said IKEA's talks with the Indian government to further open up foreign direct investment in single-brand retail had fallen through, leading to the cancellation of the planned investment. (Reporting by Devidutta Tripathy in New Delhi and Anna Ringstrom in Stockholm; Editing by Ranjit Gangadharan and David Holmes)