Govt in no hurry to push FDI in aviation

The jinx preventing foreign airlines from investing in Indian carriers seems to be a tough one to break. The civil aviation ministry appears to be in no hurry to push for an early green signal for removing the bar on foreign airlines buying stakes in Indian carriers. Before the elections, civil aviation minister Praful Patel had floated a proposal to allow foreign airlines to pick up up to 25% in Indian carriers, and there was expectation that it would materialise soon, since the UPA has returned to power much stronger.
However, Mr Patel indicated in an exclusive interview to ET NOW on Wednesday that there was no hurrying into further FDI liberalisation in this sector, as priorities were shifting. At the same breath, he said the government was open to new channels of investment in Indian airlines.
Mr Patel said there was no bailout package on cards for the airline industry, which is saddled with losses and he was keen to complete the bidding process for the second airport for Mumbai next year. Excerpts from the first interview of the civil aviation minister after his return to Rajiv Gandhi Bhavan, in which he also talks about the timeline for the Air India IPO and a wider role for the Airport Economic Regulatory Authority.
When can we expect foreign airlines getting permission to buy stakes in Indian carriers?
Foreign direct investment (FDI) is an ongoing process. It does not necessarily mean what was relevant yesterday will be relevant today. There was time when there was no FDI. Then it became 40%, now it is 49%. There is a certain section which says that foreign airlines should also be allowed to pick up a stake.
If you go by international norms, there is no standard rule applied everywhere. In the US, you can pick up 25%, in some other countries you can pick up some more and in some, you can’t pick up anything. So airlines are not to be bracketed in the same way as many other industries.

But we are open to such kind of new ways of investing in our carriers. I would like not to comment immediately. While on one side I agree I have always said that we stand for more liberalisation, we stand for more investment coming into the sector. Also, we need to look at it very meaningfully, but at the end of the day, we have a very liberal approach.
04/6/09 Nirbhay Kumar & Faizan Khan/Economic Times

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