Only Indian Airlines would be allowed to operate in the Gulf region for the next three years and private airlines will not be allowed in this region during the period, he told reporters after the Cabinet meeting.

"Those private airlines who get permission to fly overseas will be able to do so," he added. Guidelines will be framed in this regard later, he added.

Later, Defence Minister Pranab Mukherjee said the private airlines, would be allowed to operate to foreign destinations which have "a minimum of five years continuous experience and minimum of 20 aircraft in their fleet", besides a minimum mileage coverage, a condition only Jet Airways and Air Sahara may be able to comply with.

He said they would also have to confine themselves to the norms laid down by the directorate general of civil aviation in this regard.

The Cabinet also decided to discontinue the practice of mandating commercial agreements on all new services and review the existing commercial agreements, aiming at phasing them out over the next five years.

Mukherjee said the Civil Aviation Minister has also been asked to come out with a policy paper on liberalisation of the sector, including the concept of 'open sky', soon before the Cabinet for its approval.

The new civil aviation policy will have to provide a roadmap for the liberalisation of the sector, with an aim to make flying more affordable and provide more connectivity and passenger and cargo capacity.