New Delhi: The Tata Group and Singapore Airlines (SIA) have set up a separate company to bid for Air India, according to Ishaat Hussain, finance director at Tata Sons. "We have formed a special purpose vehicle (SPV) for the Air India bid," he said.

Tatas will hold a 51 per cent stake and Singapore Airlines will hold a 49 per cent stake in this company, which is yet to be named.

Under the rules of the bids invited by the government last November, foreign airlines can directly hold a maximum 26 per cent stake in Air India. Friday was the last day for technical bids to close. The Tata group and Singapore Airlines would emerge as strong contenders for Air India, he said.

The Tatas decided not to bid for domestic carrier Indian Airlines after careful consideration, Hussain said. "We had to make a choice, and we decided not to go-ahead with an Indian airlines bid," Hussain said.

The Tata group's exit from Indian airlines has left the filed open for India's Videocon International and the Hinduja brothers.