CoS meet may decide on 49% FDI in airlines

New Delhi: The committee of secretaries (CoS) on foreign direct investment (FDI), slated to meet next week, may take up the proposal to allow 49% FDI in domestic airlines by their foreign counterparts.
The proposal, if cleared by the COS, and followed by a cabinet approval, would allow foreign airlines such as Singapore Airlines, British Airways and Lufthansa to pick up equity stakes in domestic carriers, a senior official told ET.
The department of industrial policy and promotion (DIPP)—the nodal department for framing FDI policy—has proposed that FDI up to 49% in the aviation sector be allowed on the automatic route, which implies foreign airlines would not have to take a prior approval from the foreign investment promotion board (FIPB) before investing in domestic carriers.
DIPP’s proposal is more liberal than the 20-25 % stake that the ministry of civil aviation has proposed for foreign airlines in domestic airlines. The change in the FDI rules, if approved, will help not only the 15 scheduled airlines like Kingfisher and Air India but also the 98 non-scheduled operators, including Ahmedabad Aviation and Aeronautics and Span Air.
At present, foreign airlines are not allowed to hold a direct or indirect stake in domestic airlines. However, foreign companies other than airlines are allowed to hold up to 49% stake in domestic carriers.
01/04/09 Rajat Guha/Economic Times

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