Yaatri,
Considering a few months back I wrote a blog post on Air India that appeared almost verbatim in an Indian newspaper the following day ... I can't say I trust certain elements of the Indian media as well ... however, in this case, Air India is posturing and blowing a lot of smoke.
The fact is that Air India is in serious trouble as we all know. The Star Alliance member CEOs can look past poor customer service, an interior website, flight schedule reliability issues, they can even look past labour issues and government interference ... what they cannot overlook is the financial state of the airline.
Air India is massively in debt, has liquidity issues, has repeated problems paying employees, paying for fuel, paying airport fees and is about to miss its third loan interest payment in a row. Member airlines need to factor in the stability of the airline, the ability of Air India to keep up its financial stake in Star Alliance and pay its way in the alliance (such as paying for FFP award seats, marketing cost, joint lounges, etc).
The vote to allow or disallow Air India to join Star Alliance was scheduled for Sunday, but we're now well into Monday in India and in Germany, with no answer. Some airlines have a greater interest in Air India joining, some have less of an interest. Those with a greater stake in Air India joining are in debates with those who no longer wish to allow the airline into the alliance.
Keep in mind that one firm veto blocks Air India from joining. This mean, for example, if Singapore Airlines digs its heals in and says "NO" and they have no intention if being swayed into saying yes ... the Exec Board could extend the voting period until they are satisfied with the vote of Yes or No.
Air India needed to meet the 75+ entry requirements by July 31st, but Star Alliance does not need to confirm their entry by July 31st.