The FIPB had referred Alcan's application to the core group as this was the first case of its kind where a foreign company was seeking approval to hike its stake in an Indian company through an open offer in the secondary market.

Officials sources said most of the members of the core group were in favour of clearing the proposal at its last meeting on Friday, but the case was put on hold due to certain reservations expressed by finance secretary MS Ahluwalia. "The finance secretary's reservations were cleared at today's meeting," a top government official said.

With the core group's approval, whose members include industry secretary T R Prasad, finance secretary MS Ahluwalia and commerce secretary P P Prabhu, the Alcan proposal of making an open offer to hike its stake in Indal from 34 per cent to54 per cent is expected to be formally cleared by FIPB at its next meeting this Saturday.

The core group's approval to the Alcan proposal also opens the gates for other foreign companies to hike or acquire stakes in Indian companies through open offers in the secondary market.

Alcan's open offer, which opened alongwith Sterlite Industries' offer a couple of days ago, had been put under a question mark following delay in FIPB approval. Sterlite Industries, which first made an open offer for Indal shares, had submitted a representation before the FIPB against Alcan proposal on several grounds including one that only foreign institutional investors (FIIs) were allowed to pick up shares of Indian companies from the secondary market.

Both Sterlite and Alcan top brass met ministers and senior government officials over the last one month to press their cases.

With Alcan's chances having brightened with the clearance, Sterlite may have to take a decision soon whether it wants to revise its Rs 115 per shareoffer price, as indicated by its top executives recently, against Alcan's open offer of Rs 125 for Indal shares.