Aviation minister warned Kingfisher Airlines that its licence may be cancelled if safety norms and financial viability conditions are not met.
Kingfisher Airlines, which has debt of $1.3 billion, is scrambling to raise funds as banks have refused to lend more for day-to-day operations.
A massive cutback in flights has reduced its revenue, leaving the carrier with little cash to pay its employees, airports and tax authorities.
Vijay Mallya, the flamboyant liquor baron who owns a majority of Kingfisher, was due to meet the DGCA later on Tuesday or Wednesday, said Singh.
"If he gives a plan and says I have that many planes, that much schedule, then why should we cancel?," Singh said.
"The problem is, last two-three months, he has given several plans and he has not adhered to any of them," Singh said.
Shares of Kingfisher Airlines, which has a market capitalisation of about $200 million, hit an all-time low in early trade on Tuesday. At 12.43pm, they were down 6.2% at 18.85 rupees in a flat Mumbai market.
"As a government, we don't want to shut down any industry. There are employees and customers involved. Kingfisher had 22% traffic. If we close it suddenly, where will the fares go?," Singh said.
Adding to its mounting woes, Kingfisher's last independent director quit on Monday.