India's government is open to selling a partial stake in debt-laden state-run carrier Air India to a foreign airline, people familiar with the matter said on Wednesday.

The government has moved about 300 billion rupees (US$4.21 billion) of Air India's debt to a separate holding company, leaving the carrier with roughly another 300 billion rupees of debt, the people said.

The government will also likely invite preliminary bids for the carrier by Oct. 10, the sources added.