Foreign airlines' FDI bid fails to take off

New Delhi: Security concerns have forced the government to put on hold a proposal allowing foreign airlines to invest in domestic carriers.
A proposal by the civil aviation ministry to permit foreign airlines to pick up a 25% stake in domestic carriers is currently under the consideration of a committee of secretaries (CoS).
“Because of the turmoil in the aviation sector, an early decision on allowing foreign carriers to invest in domestic airlines is not expected. There are various pros and cons of the decision and they have to be taken into account before taking a call,” a senior civil aviation ministry official told ET.
“For certain reasons, the airline industry is considered a sensitive sector and any decision has to be taken with security in mind,” he added.
The civil aviation ministry had sent a proposal to the department of industrial policy & promotion (DIPP) for allowing foreign carriers to invest in domestic airlines. The move was aimed at making liquidity available for loss-laden domestic carriers. Indian regulations currently do not allow foreign carriers to hold equity, either directly or indirectly, in domestic airlines. It, however, allows foreign investors other than airlines to own up to 49% in Indian carriers. The existing guidelines also allow foreign direct investment by helicopter operators and ground-handling companies in local companies in the same segment.
26/08/09 Nirbhay Kumar/Economic Times

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Categories: Foreign Aug 2009