New FDI norms may take aviation to new heights

New Delhi: In a major fillip to the high-growth aviation sector, the government on Wednesday approved an almost complete overhaul of the foreign direct investment (FDI) policy for the sector.
The move will help the sector attract around $50-$70-billion investments over the next few years, which is civil aviation minister Praful Patel’s one of the goals.”FDI percentage will be 26% and the investment component of FIIs at 23%,” information and broadcasting minister PR Dasmunsi said announcing the government’s decision.
The government has capped the FDI in air transport services to 49% on the automatic route and reclassified it as domestic scheduled passenger airline sector. This sector consists of all the domestic airlines that publish fares and transport passengers.
The FDI in non-scheduled airlines, chartered airlines and cargo airlines, has been capped at 74% on the automatic route as long as no foreign airlines are participants. Manav Singh, MD of domestic chartered airline company Club One Air pegs the industry size at around Rs 350 crore and growing at 30 to 40% annually.
The cargo industry is also set for a boost with most existing airlines like Spicejet and the national carrier Air India getting heavily into cargo. The ministry estimates that India will carry around 4 million tonne cargo by 2010. FDI in ground-handling services has been hiked to 74% on the automatic route, subject to sectoral regulations and security clearance.
The FDI norms for scheduled and non-scheduled air services, cargo and ground handling are allows non-resident Indians (NRI) 100% investment.
30/01/08 Financial Express

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Categories: Foreign Jan 2008, Indian Aviation- In General Jan 2008, New Jan 2008