The civil aviation ministry will oppose the group of ministers' recommendations on allowing foreign airline participation in the domestic aviation companies.
Reacting to the GoM's recommendations, senior ministry officials said it would contest the proposal before the Cabinet.
"We are not against raising the equity cap, but we have been principally against the inclusion of foreign airlines and we will register our protest in the Cabinet meeting," officials said.
The GoM, which met on Thursday recommended the inclusion of foreign airlines within the equity cap on domestic airlines.
The GoM also proposed the cap be raised from the current 40 per cent to 49 per cent. These were part of the recommendations of the NK Singh committee on FDI in August 2002.
The aviation ministry had formally presented its opinion before the GoM in November itself. The ministry is of the opinion that the market situation at present is not conducive for raising the equity cap.
The main reason behind the opposition to the entry of foreign airlines within the equity cap is that such a step will queer the pitch for the disinvestment of the national carriers.
The ministry thinks India will not be able to attract FDI in the aviation industry in the current market scenario.
"The only airlines that would be interested in Indian airlines at this point of time would be the Gulf based ones, which is not a very lucrative proposition," ministry officials said.
The officials added that there was hardly any instance of allowing foreign investment in the domestic aviation sector anywhere in the world.
There is also an apprehension that a foreign airline will exploit the domestic hub and use this to generate traffic on its international point-to-point route which would be detrimental for Air-India.
The ministry, however, has no objection to the GoM's recommendations on allowing 100 per cent FDI in airports through the automatic route.
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