Ministry pushes for easier FDI in airlines

New Delhi: The civil aviation ministry is lobbying with various government arms for relaxing the foreign direct investment (FDI) policy, which restricts foreign airlines from picking up an equity stake in a domestic carrier, before the formal announcement of the general election.
It is also pushing for providing a bail-out package to government-owned Air India, which is facing a liquidity crunch. The formal announcement of the general election will kick off the model code of conduct that prohibits the government from taking any major policy decisions.
“We want more policy decisions to be taken before the Parliament session begins on February 12. We are pushing hard for allowing foreign airlines to invest in domestic airlines. We know that there are not many who would invest right now in aviation sector but we should keep the window open for the future,” a senior official in the ministry of civil aviation said.
He also said the ministry would pitch for equity infusion and a soft loan for Air India with the finance ministry as the airline’s financial health was in a critical condition. State-owned airline has sought nearly Rs 4,000 crore from the government to meet its financial and operational challenges.
“The civil aviation ministry has referred the proposal to the finance ministry after its vetting,” he said. Air India accounts for nearly half the losses of the almost Rs 8,000 crore incurred by all the airlines together in 2007-08.
The aviation ministry is also expected to allow GMR Group-led Delhi International Airport Ltd (DIAL) to levy airport development fee from outbound domestic and international passengers in the coming weeks. DIAL’s proposal has been pending with the aviation ministry for the last few months.
04/02/09 Nirbhay Kumar/Economic Times

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Categories: Foreign Feb 2009, Indian Aviation- In General Feb 2009