As I understand, Air Deccan theone year old LCC is the prime candidate. Air Deccan promoters are already on talks to divest some of their stake to an outside investor, so I guess if the price is right, Virgin Cola or Virgin Music might be the one . Rival Jet Airways has successfully managed to put in a clause in the government's guidelines to ensure that no "foreign airline" can pick up a fiancial stake in a domestic airline.
Other possible candidates for acquistion being bandied about are Kingfisher , the LCC due to get off the ground by middle of next year or may be even Air Sahara.
There is no doubt about the potential for an LCC here in India. Air Deccan's cheapest fares start at 700 Rs (10 Pounds) inclusive of taxes, and one year after they have started, we have seen even main line carriers like Jet Airways and Indian Airlines offering some really low fares,
Indian passengers are really having a great time.