Cabinet to consider FDI in airlines next week

A positive decision would have paved the way for a lifeline for struggling Kingfisher Airlines .

Shares in carriers reversed their early gains after the news. Kingfisher and Jet Airways fell by 4%, while SpiceJet dropped 5%.

India's airlines, facing a debt-load of USD 20 billion and losses of USD 2.5 billion, have been hurt by higher fuel costs and massive competition, and are looking for ways to bring in cash to run daily operations.

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49%.

Also watch the accompanying videos for analysis by CNBC-TV18's Nayantara Rai.