The government on Thursday deferred a decision on a legislative bill that seeks to throw open the country's pension sector to foreign investors, clouding prospects for economic reforms.
Although no reason was offered for postponing the decision, differences within the ruling coalition is widely seen as the main roadblock.
Lack of notable reforms since the re-election of the Congress-led government in 2009 has throttled India's growth. The economy expanded at its worst pace in nine years in the first quarter of 2012 and the outlook remains wary.
The pension bill, which proposes to allow foreign direct investment up to 26 percent in the sector, has a history of running into trouble. It was deferred last December after a key government ally opposed legislation.
Dissension within the ruling alliance last year forced Prime Minister Manmohan Singh to put on hold a decision to allow retailers like Wal-Mart to invest in supermarkets.