Reportedly the Indian government is planning to allow foreign aviation firms to invest directly in Indian air carriers, which are facing severe cash crunch and competitive pressure. India's industry secretary, R. P. Singh said that the government is considering allowing them to buy stakes in Indian carriers. The government’s policy on foreign investment in aviation is restrictive at present. It allows foreign investment of up to 49 percent in Indian carriers but the foreign airlines are not permitted to invest directly or indirectly in domestic carriers. The government is most likely to approve a plan to allow them to start investing in Indian airline companies, Singh told reporting agency, Reuters. The move could help domestic airlines struggling with high debt and mounting losses in the highly competitive market. After the indication from the government, the shares of Kingfisher Airlines rose about 6 percent, Jet Airways rose 3.6 percent, while SpiceJet increased 4 percent.

According to some sources, the Department of Industrial Policy and Promotion (DIPP) and the Civil Aviation Ministry have differences over the percentage of stake to be allowed for foreign players. Reportedly, the industry ministry wants airlines to be allowed to take 26 percent stake but the civil aviation ministry wants limit at 24 percent.

The indication comes a month after the comments by Civil Aviation Minister Vayalar Ravi in which he said that the ministry had not rejected the FDI proposal sent by the DIPP and the proposals are under considerations.