The newly elected state government in New Delhi on Monday barred foreign supermarkets from setting up shop, a blow to Prime Minister Manmohan Singh's efforts to attract overseas investment and revive the economy.

Singh had thrown open the country's $500 billion retail industry to foreign investors in late 2012, allowing companies such as Wal-Mart Stores Inc and Tesco PLC to own a majority stake in local chains for the first time. Read more