By Aditya Kalra

NEW DELHI (Reuters) - Private equity investor Blackstone has pulled out of the race to pick up a minority stake in the snacks business of India's Haldiram's over valuation concerns, two sources with direct knowledge of the matter said on Tuesday.

Rival bidder Temasek remains in the race to acquire a minority stake in the business, said a third source with direct knowledge of discussions.

Blackstone had spent seven months on the deal, but there is "no turning back" now from a decision to end talks, one of the first people said.

Haldiram's, which also has restaurant operations, is estimated by Euromonitor International to hold a near 13% share of India's $6.2 billion savoury snacks market, and its snacks business has proved a tempting asset for many foreign investors.

But valuation has been a sticking point in the deal talks between Haldiram's and Blackstone, which was initially keen on a majority stake but later agreed to go for a smaller share, Reuters reported in November.

While Blackstone wanted around a 15% stake at a valuation of roughly $8 billion and to work with management in the future, Haldiram's was only keen to get them onboard as a financial investor and at a higher valuation of $10 billion, said the first source.

Haldiram's CEO Krishan Kumar Chutani declined to comment. Blackstone did not immediately respond to Reuters' request for comment, and Temasek declined to comment.

There was also a disconnect over a potential IPO timeline. While Blackstone wanted Haldiram's to consider an IPO within three years of investment, the Indian company was pushing for five years.

Haldiram's started in 1937 with a tiny shop in the city of Bikaner in the western desert state of Rajasthan.

One of Haldiram's most popular snacks is "bhujia", a crispy fried Indian snack made with flour, herbs and spices and sold for as little as 10 rupees (12 U.S. cents) in mom-and-pop stores.

(Additional reporting by Aditi Shah and Dhwani Pandya; Editing by Jan Harvey)