26 % FDI in aviation sector put on hold?

New Delhi: The Central Government is understood to have put on hold the 26 per cent foreign direct investment (FDI) proposal for the aviation sector.
The move comes close on the heels of the decision of the government not to go ahead with the 51 per cent FDI in multi-brand retail decision for the time being.
There was an argument within the government and especially the Finance Ministry that any move at this juncture to allow enhanced FDI in aviation sector would send a wrong message among the masses as it would be seen as an effort by the government to bail out the cash strapped domestic airlines.
The top honchos of the domestic carriers had met Prime Minister Manmohan Singh on November 26, seeking review of the aviation policies and allowing FDI in domestic airlines. They had stressed on the urgent need to rationalise sales tax on aviation turbine fuel and faster approvals for private airlines to fly on international routes where bilateral rights from the Indian side remain underutilised. The domestic airline chiefs, who met Dr. Singh, included Jet Airways' Naresh Goyal, IndiGo's Rahul Bhatia, SpiceJet CEO Neil Mills and GoAir's Jeh Wadia.
The Finance Ministry had also favoured the move by the Department of Industrial Policy and Promotion (DIPP) to increase the FDI limit in the aviation sector and had given its green signal to the move on Friday. However, the government appears to have developed cold feet after the recent spate of events, including the stalling of Parliament on the issue of FDI in retail.
06/12/11 Sujay Mehdudia/The Hindu

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Categories: Foreign Dec 2011, Indian Aviation- In General Dec 2011