India's Jet Airways Ltd is the front-runner for an investment by Gulf carrier Etihad Airways, a senior Indian government source told reporters on Wednesday.
The source added that a deal was likely in 10 days, Reuters reported.
Etihad Airways, seeking to widen operations in India and other Asian markets, is in the final stages of talks to buy part of either Jet Airways or grounded rival Kingfisher Airlines, an Indian government official had said on December 17.
A deal would be the first since the government relaxed ownership rules in September to allow foreign airlines to invest up to 49 percent in a domestic carrier.
Buying into Jet is seen as more lucrative for Etihad as the two carriers already have a code-sharing agreement and could target the market share of state-owned Air India and Dubai-based Emirates Airline, the latter of which dominates routes between India and the Middle East.
Indian carrier Jet Airways said on December 29 that it will add flights to Dubai from two Indian cities later this month.
It will start flying six times a week to Dubai from Mangalore from January 3 and will introduce a second service between Delhi and Dubai from January 18.
Jet Airways currently operates daily direct flights to Dubai from Delhi, and four services a day from Mumbai.