The civil aviation ministry's proposal to allow foreign capital by international airlines in cash-strapped domestic carriers may come up for the cabinet's approval before the budget session, a minister said Tuesday.

"We will send a proposal in regard to foreign airlines entering domestic carriers through FDI (foreign direct investment) to the commerce ministry and from there to the cabinet," Civil Aviation Minister Ajit Singh told reporters here. "This may happen before the budget." he added.

Currently, foreign airlines are not allowed to directly invest in Indian carriers for security reasons. However, 49 percent of FDI is allowed by non-airline players.

On Jan 17, a group of ministers (GoM) headed by Finance Minister Pranab Mukherjee agreed to draft a cabinet note proposing a 49 percent cap on FDI by foreign carriers' in domestic airlines as per an IANS report.

Before this, various government departments has proposed different investment caps, from 24 percent to 26 percent. The commerce ministry's department of industrial policy and promotion (DIPP) had suggested a 26 percent cap.

"Private airlines in the country are in need of funds for operations and service upgradation to compete with other global carriers," said the DIPP note.

When asked whether foreign airlines would be interested in investing in domestic carriers, Singh said: "Indian civil aviation is growing at a very fast pace and we want to develop it (India) like a hub."

Owing to high jet fuel and interest costs, three major airlines -- Kingfisher, Jet and SpiceJet -- reported heavy second quarter losses.

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