A key political ally is to meet on Tuesday to decide on whether or not to withdraw from the Indian government.
The Trinamool Congress party has demanded that the government scrap its decision to open up India's retail sector to global supermarket chains.
Separately, India's opposition parties have called for a nationwide strike on Thursday to protest the decision.
Delhi's plan is aimed at reviving a flagging economy, but small shops fear they will be put out of business.
Last year, the government was forced to suspend a similar plan amid protests.
On Saturday, Mamata Banerjee, the leader of the Trinamool Congress party and chief minister of West Bengal state, gave Delhi 72 hours to reverse the new policy and warned she could withdraw from the government.
Media reports suggest federal ministers belonging to the party may quit in protest, but Ms Banerjee is likely to continue supporting the government.
Ms Banerjee has said her party will have to take "hard decisions" if the federal government does not roll back its decision to open up the retail sector.
Under the government's proposal, global firms - such as Walmart and Tesco - will be able to buy up to a 51% stake in multi-brand retailers.
Multinational retailers already have outlets in India, but they deal with smaller retailers. This decision allows them to sell directly to Indian consumers.
Indian Prime Minister Manmohan Singh has said that the reforms "will help strengthen our growth process and generate employment in these difficult times".
17 Sep, 2012
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Source: http://www.bbc.co.uk/news/world-asia-india-19620173#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
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