According to government officials, the union cabinet will take a decision on the proposal to allow foreign airlines to invest in Indian aviation firms within the next few weeks.

The proposal to allow foreign aviation companies to start investing in India's airlines will come as a relief to the cash-strapped firms in the country like Kingfisher and others. It recommends allowing foreign airlines to buy up to 49 per cent stake in Indian carriers.

The ministries of Finance and Civil Aviation are already backing the proposal amend the FDI guidelines for the aviation sector and there are some ministries that are yet to announce give their approval. 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. The move could help domestic airlines struggling with high debt and mounting losses in the highly competitive market.

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.