The Tata group on Friday submitted a bid for the national flag-carrier Air India, but dropped out of the race for Indian Airlines, a group spokesman said.

Bidding for a 40 per cent stake in international carrier, Air-India and a 26 per cent stake in Indian Airlines, largely a domestic airline, closed on Friday. "We have put in our bid for Air-India. We are not bidding for Indian Airlines," a Tata group spokesman told this newspaper. The Tata bid for Air-India was in partnership with Singapore Airlines, he added.

Foreign airlines are barred from investing in Indian Airlines, which draws two-third of its revenue from domestic routes. The group, however, did not give any reasons why they dropped out of Indian Airlines race. But insiders say that nebulous domestic aviation policy is the main reason why very few players, including the Tatas have decided to opt out. Foreign airlines are barred form bidding for Indian Airlines, but can bid for Air India.

The exit of the Tatas from the Indian Airlines' race leaves the field open for the controversial Hinduja brothers and consumer electronics firm, Videocon.

The Hindujas have already roped in Lufthansa as a technical collaborator in their bid. Videocon Chairman Venugopal Dhoot said he could not disclose the name of his technical partner due to a non-disclosure clause. The Tata group, Videocon and the Hindujas were the only three bidders who put in initial expressions of interest (EoI) last November for the domestic airline.

The Tata-Singapore Airlines bid for Air India is the second confirmed entry for the money-losing airline. The Hinduja brothers, with the technical collaboration of Lufthansa, have also tabled a bid for Air India.

Air France and Atlanta-based Delta Airlines the third-largest US airline, have also teamed up to bid jointly. London-based steel magnate L N Mittal has withdrawn from the race.