In a compromise hammered out with the Left parties, the United Progressive Alliance government has proposed to scale down the foreign direct investment limit in the Mumbai and Delhi airports from 74 per cent to 49 per cent.

Top government officials told Business Standard that the Airports Authority of India and some other public sector undertakings would hold 26 per cent stakes in the new ventures to be created for managing the two airports.

The public sector stake will represent the government's interests while the balance 25 per cent will be offered to Indian entities.

Civil Aviation Minister Praful Patel is likely to announce a final decision at a press conference on Wednesday. Ministry officials said the deadline for submission of expressions of interest, June 4, would also be extended by at least a month.

This will be one of the first major decisions of the new government on foreign investment and might set a precedent for other FDI proposals on contentious sectors like retailing and telecom.

The officials said while the Left parties were planning an agitation outside the Airports Authority of India premises during the week, a settlement had already been reached among the UPA constituents and the Left parties.

The AAI had last week made a detailed presentation to the new minister on the status of the privatisation of the Delhi and Mumbai airports.

The decision to extend the deadline for submission of expressions of interest was essentially to ensure that the prospective investors would have time to revise their technical and financial bids in the wake of new FDI norms.

The officials said the scaling down of the FDI limit was not really significant since it was expected that foreign bidders would rope in an Indian corporate in the venture even though they were allowed to hold 74 per cent equity.

The common minimum programme of the UPA too has sought FDI in crucial infrastructure sectors. While civil aviation was not specifically mentioned in the common minimum programme, Finance Minister P Chidambaram had last week indicated that FDI in airports was a part of the agenda.