Plans to allow foreign investment from global retailers including Tesco, Carrefour and Walmart in India are on ice as the government looks to find a “consensus”.

Indian prime minister Manmohan Singh had last week indicated that foreign retailers would be allowed to own up to 51% of supermarket chains after years of speculation over an amendment to Foreign Direct Investment rules.

But, following widespread protest from independent retailers who fear foreign encroachment on the market, Mamata Banerjee of the Trinamool Congress which contributes 19 votes to the ruling Congress party-led coalition, said that finance minister Pranab Mukherjee had told her that the policy would be put on hold.

Banerjee, chief minister for West Bengal, told reporters: “[Mukherjee] has told me that the decision will not be implemented unless there is consensus on the issue.”

Foreign investors have been waiting on a decision for two years. The cap on single-brand stores including Apple and Ikea was to be raised from 51% to 100% but that decision is also on hold.

Singh is keen to attract foreign investment to improve supply chain infrastructure and benefit from potential increased revenue in the economy from India’s burgeoning middle class.

Currently, operators such as Tesco can only sell wholesale in India but not directly to customers.   

Raj Jain, president and chief executive of Walmart’s operations in India, said last week: “We are willing and able to invest in back-end infrastructure that will help reduce wastage of farm produce, improve the livelihood of farmers, lower prices of products and ease supply-side inflation, thus saving people money so they can live better.

“We also believe that extending the scope of this policy beyond cities with a one million population will bring immense benefits in the form of jobs and access to quality merchandise at great prices. It will also supplement our efforts to build an efficient and sustainable supply chain with regional geographical synergies.”

Under the proposals, international retailers would be initially restricted to cities with more than one million people, of which there are 53 in India.