In what could be a dampener to the global retail chains, the Centre is considering allowing 51 per cent FDI in the politically sensitive sector with a rider that permission of the states would be a must to open stores, sources said.

"The states' permission would be required, since the trade is a state subject," an official said.

The development could be a big dampener for the global chains like Wal-Mart, Metro and Carrefour which have been waiting since long for India to open foreign direct investment (FDI) in the multi-brand retail, industry sources said.

They said even if the Centre were to throw open the sector to overseas investment, several states, particularly those ruled by the BJP, might not allow entry of these chains, thus impacting their front-end plans. (PTI)