FDI in aviation may take off only after Budget

New Delhi: Cabinet nod to allow foreign airlines to buy up to 49 per cent stake in Indian carriers is likely to become a reality only after the Budget. Reason: The government does not want to be seen as favouring any one company.
Foreign direct investment (FDI) up to 49 per cent is permitted in domestic airlines, but foreign airlines are not allowed to pick up stakes in domestic carriers. The government’s move to allow the FDI in domestic airlines is expected to benefit cash-strapped Kingfisher Airlines. It could also provide a reprieve for the many airlines that are also under financial strain and have been looking at raising funds.
Kingfisher and SpiceJet have warmed up to the idea of foreign funding, but Jet Airways and IndiGo have shown no interest.
A senior government official closely associated with the thought process of the government said the underlying message from the Prime Minister’s Office was to time the permitting of FDI in a way that would not be perceived as a move to benefit a person or a company.
“It is not coming in a hurry,” he told Business Standard. “A part of the problem is that domestic carriers are not very clear on the efficacy of this move. This needs to be kept in mind.” The official also pointed out that foreign airlines would like to have a chunk of stake in the Indian carriers. “Otherwise, why would they come in here?”
The official hinted that the Cabinet approval on permitting 49 per cent FDI in aviation might be taken up some time after the Budget. “It can most likely happen in June only. That is the period when the government wants to push critical FDI policy clearances.”
23/02/12 Santosh Tiwari & Nayanima Basu/Business Standard

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Feb 2012