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India is not currently considering selling stakes in state-run carrier Air India and helicopter services provider Pawan Hans Helicopters, the civil aviation secretary said on Wednesday.

In December, Civil Aviation Minister Praful Patel had said Air India planned to sell up to 15 percent of its equity in an initial public offering to raise funds for expansion.

But turmoil in local and international share markets has limited investor appetite for new issues, forcing at least 10 Indian firms to delay or shelve IPOs worth about USD$4 billion this year. The outlook remains downbeat for the rest of the year.

"The ministry is not actively looking at it," secretary Ashok Chawla told reporters on the sidelines of a conference when asked about a share issue.

Air India, which was merged with state-run Indian Airlines in August 2007, holds 18.3 percent of India's domestic passenger market, according to the latest government data.

Analysts expect the Indian government to revive its privatization drive after it won a confidence vote in July and parted ways with communist allies, who were opposed to selling stakes in state firms.

Chawla said Air India was likely to seek INR10 billion - INR15 billion rupees (USD$228 million - USD$342 million) in government funds, partly in the form of loans, as it needs money to run its operations.

"Air India is still debating internally and in their board. We expect them to come with some proposal... I think it will come in next two weeks or so," Chawla said.

National Aviation, which runs Air India, on August 12 said it had tied up about USD$214 million through loans to part-finance its purchase of eight Boeing aircraft.

(Reuters)