It's official now, the Star-dream of Air India has ended. Previously it was placed 'on-hold', but conversations between AI and Star continued.
But now civil aviation minister Ajit Singh said Star Alliance informed them that they couldn't come to an agreement over Air India and because of that they are fully rejected.
To be part of the alliance, every member has to agree and that has not happened, especially after the pilots’ strike, when we lost a lot of credibility. They have practically said no and have sent us a letter last week. We have asked Air India to look for other options and alliances.
And even more important (also a quote from Singh):
I think Jet being a private airline cannot be a cause to stop them. It is also a domestic airline and flies with our national flag. It is up to Star Alliance to accept them.
It seems India finally accepted that Star doesn't want a messed up Air India, but they do want Jet Airways. And with AI officially being rejected they have no ground to stand on to keep 9W from joining Star. http://www.business-standard.com/india/news/ais-star-dream-ends/482772/
Tough I don't believe this has totally ended yet...It's still India of course.