The civil aviation ministry is open to the idea of raising the foreign direct investment level from the present 40 per cent to 49 per cent, even as there are indications that a decision on the issue could be taken in the Union Budget.
Ministry sources said the Budget was likely to contain announcements to give a fillip to the process of modernisation of the four metro airports.
Sources said the ministry was, however, not in favour of allowing foreign airlines to pick up stake in domestic carriers.
No foreign airline would in any way be interested in picking up stake in a domestic carrier at the moment primarily due to commercial reasons, they said.
The Budget is expected to lay the roadmap for further liberalising FDI regime by enhancing sectoral caps on certain sectors including civil aviation, even though the Group of Ministers on FDI, which was scheduled to meet on Friday to consider the recommendations of N K Singh committee report on opening up FDI, was deferred.
But the official sources said the Budget could still contain announcement on FDI.
The sources said there may be no good news immediately for Indian state-owned and private airlines on account of Aviation Turbine Fuel, taxes on which are adversely affecting their profitability.
However, the ministry is taking independent initiative to coax and convince state governments to lower the sales tax on ATF and has so far succeeded in Andhra Pradesh and Goa where the tax has been reduced to four per cent.
The ministry has also got an assurance to this effect from the Assam government, sources said. The ATF rates in other states range from 20 to 39 per cent.