The national carrier has a debt burden of around Rs 550 billion and efforts are being pursued to bolster the airline, including reduction of interest outgo.
The senior Civil Aviation Ministry official said Rs 290 billion debt would be transferred to the SPV, which has already been set up.
The move is expected to help in easing the financial burden on the airline.
Meanwhile, a plan is also being implemented that would result in annual financial benefits worth Rs 20 billion by way of cost cutting and revenue enhancement measures.
As part of revival plan for the airline, a ministerial panel on Tuesday approved a proposal for strategic sale of Air India's ground handling subsidiary AIATSL.