Significantly, the government has also retained the right to appoint the chairperson of the airline.

These provisions are part of draft shareholders' agreement circulated by the government to shortlisted bidders of Indian Airlines.

In effect, the clause empowers the government with such powers that no decision can be taken by the strategic partner (or its affiliate) without the government's consent as long as it holds "any" equity shares in the domestic carrier. This means that the government can block board decisions even if it owns only a single share in the airline.

Industry analysts say that the clause virtually revives the concept of golden share floated earlier by the government. Though this time the government has not used the word golden share, the clause requiring IA board to take government approval even if it holds one share, gives the government equivalent powers.

Further it adds that "No obligation, decision or determination of the company or any of its affiliates will be entered into or made and no action will be taken by or with the board," without the consent of the government.

Sources said the clause may prove to be a roadblock for the interested players to bid for Indian Airlines.

For Indian Airlines, the government has invited a strategic partner for divesting its 26 per cent equity stake. The strategic partner may be an Indian company or a non-resident Indian. All decisions including day-to-day operations or other marketing and strategic decisions require a board approval. Such Government to hold veto powers in IA post-selloffdecisions include the airline's business plan, budget, forecasts and targets for the year.

Industry analysts feel that the clause may prove a deterrent in the efficient working of the airline, if the government is not in favour of a board decision. No decision regarding debt raising by the airline or other crucial decisions can be taken without the government's consent. According to the expression of interest, the proposed 26 per cent shareholding can be acquired by Indian nationals or companies which are "majority-owned and effectively controlled by Indian nationals". Non-resident Indians and overseas corporate bodies are permitted to invest up to 100 per cent in domestic aviation under the proposed policy. The strategic partner, qualified to pick up stake in the domestic carrier, should have a combined group net worth of over $225 million.

The government has also put in a five-year lock-in period for the strategic partner which will acquire 26 per cent equity stake in Indian Airlines.

Industry sources said the clause is proving to be a hurdle for bidders in bringing in foreign investors, who are allowed to acquire up to 10.4 per cent stake, as partners.

The government has put further conditions on the strategic investor's exit from the airline after five years. The first right of refusal lies with the government in case the strategic investor wants to exit from Indian Airlines.