Tata Group unlikely to bid for Air India

India's steel-to-autos conglomerate Tata Group, widely seen as a potential suitor for Air India, is unlikely to consider a bid for the state-run carrier as the government's terms are just too onerous, two sources familiar with the matter said.

India, keen to sell the loss-making, debt-ridden airline, finalised plans in late March to divest a 76 percent stake and offload about $5.1 billion of its debt.

But the government stipulated the winning bidder cannot merge the airline with existing businesses as long as the government holds a stake. The winner may also need to list Air India and abide by conditions designed to safeguard employee interests, restricting its ability to cut staff.