The Ministry had allowed the proposal of 26 percent FDI by foreign airlines in private carriers. Many cash-strapped companies are worried that such investments should not violate Sebi's takeover code and under that, an open letter is triggered once an investor gains 26 percent shares of the cash-strapped companies.
The Finance Ministry had suggested the Department of Industrial Policy and Promotion (DIPP) to consult the Securities and Exchange Board of India (Sebi) on the issue of several airlines including Kingfisher and Jet Airways, sources said.
The size of the open offer is 25 percent, which means that the investor will have to buy additional equity from the public. The Home Ministry, the Planning Commission and several ministries have supported the proposal.