Home ministry leash on airline FDI

New Delhi: The home ministry wants the management of domestic airlines to be “retained by the government or in Indian hands”.
In a note to the group of ministers, which will soon finalise the civil aviation policy, the ministry stated that it had no objections to current or proposed FDI ceilings. However, management control should be with local entities or the government.
Officials said the ministry was aware that even with a 49 per cent stake, a foreign investor could be the largest shareholder, giving it control.
There is also no objection to stakes by foreign airlines in domestic companies.
However, the ministry wants its civil aviation counterpart to accept its suggestions on “security aspects” of the proposal.
The finance ministry would like to allow foreign airlines a 26 per cent stake within the 49 per cent FDI cap in domestic carriers. However, the civil aviation ministry is against such a step as this will allow foreign carriers to use domestic airlines as feeders for international operations, which will harm the prospects of state-run Air India.
The home ministry note has also opposed private ground handling companies, because of security reasons.
03/09/07 Jayanta Roy Chowdhury/The Telegraph

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Categories: Foreign Sep 2007, General Aviation Sep 2007