Such a step, industry leaders said, would raise questions about the government's ability to take policy decisions and dampen business sentiments.
"The government should not roll back... It will send a signal that the government is not capable of taking decisions," said R.V. Kanoria, president, Federation of Indian Chambers of Commerce and Industry (FICCI).
Kanoria said the growing controversy over the government's decision to allow overseas investments in retail and aviation sectors was unfortunate.
The government last week took a decision to allow up to 51 percent FDI in multi-brand retail and opened up the aviation sector to 49 percent investment by foreign airlines in domestic carriers.
The government has also announced the sharpest ever Rs.5 per litre or 12 percent increase in diesel price.
These decisions have created political turmoil in the country with a key ally of the United Progressive Alliance (UPA) government, the Mamata Banerjee-led Trinamool Congress, deciding to pull out from the government demanding a rollback.
Kiran Mazumdar Shaw, chairperson and managing director of Biocon, said FDI in retail would help the Indian economy and people and those political leaders opposing the decision were not progressive.
"Good economics does not make for good politics. The poverty card suits political agendas. Vote banks remain solid if the poor remain poor," Shaw said at micro-blogging site Twitter.
"We need clean and progressive politicians. No doubt Mamata (Mamata Banerjee) is spotlessly clean but she is not progressive," Shaw said.
Anand Mahindra, chairman of Mahindra & Mahindra, also urged the government to remain firm on the reform process.
"We urge the government to stand its ground. Right-thinking Indians will be less than amused by partisan politics in a fragile economy," Mahindra said.
Opposition parties have called nationwide strike Thursday protesting against the government's decision to hike diesel prices and allow foreign direct investments in multi-brand retail and aviation sectors.
Addressing a media conference here, FICCI president Kanoria urged political parties to reconsider their decision to go for the strike, saying it would cause huge loss to the economy.
"FICCI urges all parties to reconsider such proposed actions as these will result not only in national losses which the nation can ill-afford, but also directly affect mainly the poorer sections of society and daily wage earners," he said.
Kanoria said: "There is a large consumer base in India which is capable of buying."
"We urge the government to consider proceeding with much needed deeper reforms, as the steps taken in the past week have signalled just a start to a comprehensive reforms process," he said.