The Union Cabinet on 15 December 2004 approved the draft concession agreement to be executed between the Centre and the Hyderabad International Airports Ltd (HIAL), thereby facilitating the construction of the proposed greenfield airport near Hyderabad. The Rs.1,385-crore project is to be implemented on a BOT basis with private sector participation.

The Andhra Government has already selected a consortium led by GMR Infrastructure along with Malaysian Airport Holding Berhard (MAHB) as the joint venture partners for implementing the project. While the partners will hold 74 per cent equity in the project, the Airports Authority of India (AAI) and the State government would hold the remaining 26 per cent equity in the project.

In April 2004, the Union Cabinet had given the in-principle approval to Andhra Government's proposal for construction of a greenfield airport of international standards at Shamshabad near Hyderabad through the joint venture route.

The signing of HIAL's concession agreement would lead to financial closure for the project and facilitate the start of construction work at the new airport. The new airport is scheduled to start operations within 36 months of the financial closure. The air space management structure for the airport has been finalised with the Indian Air Force, AAI and the Director-General of Civil Aviation and forwarded to the Ministry of Defence.

The project has been given a `no-objection-certificate' by the Union ministries of defence and Environment & forests.