A majority stake in Bharat Petroleum is to be sold through share issues to the public, while a majority stake in Hindustan Petroleum is to be sold to a strategic partner, Privatisation Minister Arun Shourie told parliament.

The decision followed months of feuding among government ministers, many of whom have expressed deep concerns about the privatisation plans.

Petroleum Minister Ram Naik had blocked the original structure of the sell-off, which had called for both companies to be sold to strategic partners.

And Defence Minister George Fernandes had called the whole privatisation process into question, saying that the sale would create security issues and that privatisation amounted to selling the country to foreigners.

Stubborn deficit

These and other concerns have dogged the government's overall privatisation plan which is failing to live up to expectations.

So far, only 50bn rupees (£635m; $1bn) have been raised from the sale of state assets, less than half the government's target of 120bn rupees.

This has made it tough for the government to push through reductions to a budget deficit of 5.35% of India's output.

Powerful players

The government owns 51% of Hindustan Petroleum and 66% of Bharat Petroleum.

Between them, the two companies control the domestic fuel market.

The Anglo-Dutch energy giant Royal Dutch-Shell and the Indian conglomerate Reliance Industries have both said they might want to buy into the oil companies.