For clarity stakes for all 49% FDI has been allowed in Indian Aviation for the longest time. What the restriction is that no foreign carrier can hold 1% even of an Indian airline. The pressure is to allow foreign carriers to hold stakes on the assumption that they will invest in Indian carriers.
Now to analyze why they want foreign carriers to invest in Indian carriers.
Let us assume Emirates buys into KF. KF will not need to invest in larger aircraft and will essentially fill all its aircraft as a feeder for emirates, or so that is the hope. Same is if BA buys into GO then go will feed BA aircraft out of India or so that is the hope. It also gives them access to say sky world or Star.
The govt allowed them all to import fuel to reduce costs. As of now only one carrier has initiated the process.
It is my opinion that even if they open up direct investment into aviation by foreign airlines there will not be too much interest and it will fizzle in the short run.
What needs to be done is a pure rationalization of ops, the guts and the B#$lls to make sure that a good operation is put in place and instead of looking over the competitions shoulder focus on running your own business.