Government move to ease foreign direct investment (FDI) norms in certain segments in the civil aviation sector, including general aviation charter operations and ground handling services, is a welcome move. Lifting the limit of FDI in these segments from the current 74 per cent to 100 per cent will bring a positive structural push in the India's civil aviation market, resolving one of the key challenges that the industry faces currently, which is the weak infrastructure and supporting services.
The new foreign investment policy will bring large foreign companies, which have the required expertise and capabilities in this supporting segment, to set up their operations in the country in a big way.
Being choosy on the segments for allowing increased foreign investment cap is important in India.
A discussion paper prepared by Confederation of Indian Industries (CII) on FDI in airlines recently had highlighted that the key challenge for India's civil aviation sector currently is not 'more airlines', but more infrastructure.
This industry discussion paper had stated with ultimate clarity that; “Additional airlines and foreign owned carriers will certainly mean more aircraft and more congestion.” Therefore, the current move to relax FDI norms in selected areas is a decision in the right direction.
Till now, these sectors were allowed up to 49 per cent FDI under the automatic route and above this limit and up to 74 per cent were allowed under the government approval route, although 100 per cent FDI by non-resident Indians were already allowed in these sectors
12/11/15 CH.Unnikrishnan/Business World
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The new foreign investment policy will bring large foreign companies, which have the required expertise and capabilities in this supporting segment, to set up their operations in the country in a big way.
Being choosy on the segments for allowing increased foreign investment cap is important in India.
A discussion paper prepared by Confederation of Indian Industries (CII) on FDI in airlines recently had highlighted that the key challenge for India's civil aviation sector currently is not 'more airlines', but more infrastructure.
This industry discussion paper had stated with ultimate clarity that; “Additional airlines and foreign owned carriers will certainly mean more aircraft and more congestion.” Therefore, the current move to relax FDI norms in selected areas is a decision in the right direction.
Till now, these sectors were allowed up to 49 per cent FDI under the automatic route and above this limit and up to 74 per cent were allowed under the government approval route, although 100 per cent FDI by non-resident Indians were already allowed in these sectors
12/11/15 CH.Unnikrishnan/Business World
