Relaxing FDI caps in aviation back on agenda

New Delhi: In yet another attempt to allow foreign airlines to pick up to 49% equity in domestic airlines, the Planning Commission has floated a new proposal to scrap the bar on foreign carriers from investing in this sector. The proposal is expected to be taken up by the full Planning Commission at a meeting, which is likely to be chaired by prime minister Manmohan Singh, this week.
The department of industrial policy & promotion (DIPP) and the Planning Commission had earlier sought opening up of this segment for foreign airlines, but the civil aviation ministry did not accept those proposals.
“The domestic aviation sector has matured and the time has come for further liberalising FDI caps. This has also become imperative as domestic airlines are now flying abroad and forging alliances with their overseas counterparts,” a finance ministry official said.
While 49% foreign direct investment (FDI) is permitted in domestic airlines, foreign airline companies are barred from investmenting in this segment. NRIs are allowed to hold up to 100% equity in domestic airlines.
In the Eleventh Plan document draft, the Planning Commission has proposed participation of foreign airlines in domestic carriers to bring in international best practises in the domestic market. The finance ministry has indicated its willingness to open up the sector further.
07/11/07 Subhash Narayan & Nirbhay Kumar/Economic Times

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Categories: Foreign Nov 2007, General Aviation Nov 2007