Shares of Jet Airways slid on Monday amid reports that Abu Dhabi-based airline Etihad wanted to revise its deal to buy a stake in India's biggest private carrier.
Last month, Jet Airways announced it was in discussions with Etihad Airways.
But at the weekend, Etihad Airways Chairman Sheikh Hamed bin Zayed al-Nahayan was reported to have said the Gulf carrier needs to revise its planned agreement to buy a stake in Jet and it was too early to say when a deal would be struck.
Shares of Jet plunged nearly nine percent before clawing back some of their losses to close down 7.7 percent at 570.75 rupees.
Several Indian airlines have been in talks with foreign carriers after the government last year opened up the aviation sector further to allow non-Indian airlines to invest in their counterparts in the country.
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Indian carriers need money to fund expansion and cut debt after years of losses caused by intense air-fare battles and rising fuel costs.
Tail Winds, the Isle of Man-based investment firm of Jet founder Naresh Goyal, currently holds nearly 80 percent of Jet Airways.
India's Business Standard newspaper had reported that Etihad might pick up a 24-percent stake in Jet, valued at between 15 to 18 billion rupees ($270-320 million).
Meanwhile, the Press Trust of India quoted India's commerce minister as saying Etihad and Jet Airways are still keen on building a partnership.
"I am given to understand that both the airlines are in negotiations and they are keen to build a partnership," Anand Sharma said in Abu Dhabi where he was visiting.
Jet reported earlier this month that it swung into a quarterly net profit from a net loss a year ago.