New Delhi, Dec 4 (TIWN) Seeking to ensure aviation biggies' participate in the bidding for Air India sale, the government may dilute substantial ownership and effective control (SOEC) clause in the FDI guidelines for the airline sector.

Official sources said the Department for Promotion of Industry and Internal Trade (DPIIT) has been discussing the proposal with the Civil Aviation Ministry.  The present FDI rules allow up to 100 per cent FDI in domestic carriers but the investment by a foreign airline is capped at 49 per cent. Further, substantial ownership and effective control has to be in the hands of Indians.  In most of the aviation-related activities such as ground-handling, greenfield airports and Maintenance, Repair, Overhaul (MRO), FDI is allowed up to 100 per cent through the automatic route.  Relaxation in FDI rules for airlines may help generate interest among foreign players keen to get a foothold in the Indian market.