Indian low-cost carrier Air Deccan has called off its talks with Richard Branson's Virgin Blue to offload equity to the latter.

"We had discussed an equity deal with Branson. But as we found that an investment by Virgin will not add any substantial value to us, we have decided to suspend the talks," G R Gopinath, managing director, Air Deccan, told Business Standard on Thursday.

Virgin's offer to pick up equity in the Indian company came about a month back. As per the offer, Virgin Blue, Branson's low-cost carrier, was to pick up an equity stake in Air Deccan. According to Gopinath, talks with the company had reached final stages of negotiations.

"We would like to partner with a global financial institution, which will bring in value to us as well as look at it as an investment option," Gopinath said adding that the financial investor will be given the option to exit when the company makes an initial public offer.

According to Gopinath, expertise from Virgin would have come in the form of technical and other airline related assistance. But, it is felt that since Air Deccan is an operating airline, such inputs would not have given any substantial value addition.

Besides, the government stipulation, which does not allow foreign airline to invest in a domestic carrier would have also come in the way of equity investment.

According to Gopinath, the talks were initiated after the Naresh Chandra committee recommended allowing foreign airlines to invest in domestic carriers.

"Currently there is a ban on foreign airlines to invest in domestic carriers. If we had gone ahead with the investment plan, we would have had to wait till the new aviation policy comes into being," said Gopinath.

With regard to its talks with financial institutions, Gopinath said that the airline had talks with about 10 financial institutions to offload about 25 per cent stake in the company.

"We have shortlisted four of them now. We will be taking a final decision soon," he said.

Air Deccan will be starting its metro service from August 25. The airline plans to start services on the Bangalore-Delhi, Delhi-Mumbai and Mumbai-Chennai routes with two aircraft in the first phase.

In the subsequent phases, the airline will put in more aircraft on these routes. To begin with, it will have two return flights on the busy Delhi-Mumbai sector, which will be beefed up in subsequent phases.