A group of ministers (GoM) is expected to meet next week to look into the demands raised by some of the major airlines to allow foreign capital and to import jet fuel directly, informed sources said Friday.

The development comes after a committee of secretaries proposed a cap of 49 percent foreign direct investment (FDI) by foreign airlines. The commerce ministry's department of industrial policy and promotion (DIPP) had recommended 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," the DIPP note said.

Currently, the government allows for FDI up to 49 percent in Indian carriers by non-airline players but bans foreign airlines from directly investing due to security reasons.

The issue of FDI from foreign airlines was also raised by airlines chiefs' when they met Prime MinisterManmohan Singh on Nov 26, 2011.

According to sources, the GoM will review airlines' demands for permission to directly import aviation turbine fuel (ATF), there by escaping high sales tax imposed by state governments that can vary from three to 35 percent.

Jet fuel prices constitutes nearly 50 percent of operating cost of domestic carriers. Owing to high fuel cost airlines are expected to lose Rs.3,500 crore in the first six months of this fiscal.

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