NEW DELHI/JAIPUR: There is more bad news for foreign supermarket chains looking to set up shop in India with Rajasthan joining Delhi in reversing its earlier decision to allow foreign direct investment (FDI) in multi-brand retail trading.Analysts said that the move will further impact investor sentiment as it does away with stability in policy. Foreign retailers have cited the lack of unanimity among political parties as one of the key reasons to adopt a wait and watch stance before committing to investing in the country.

So far, Tesco, which has tied up with Tata Group’s Trent, is the only company to have received government go-ahead for multi-brand retail even as others such as Walmart and Carrefour have preferred to wait on the sidelines. Tesco intends to start operations in Maharashtra and Karnataka.

The newly elected BJP government in Rajasthan has communicated its decision against allowing FDI in multi brand retail to the Union commerce and industry ministry, two government officials told ToI.

Principal secretary Veenu Gupta, managing director of RIICO and in charge of the state Bureau of Investment Promotion as commissioner, confirmed that the letter was sent to the ministry on January 25. BJP has been opposed to the policy with states ruled by it, including Gujarat and Madhya Pradesh, deciding against allowing FDI in multi-brand.