India retained restrictions that prevent overseas airlines from raising stakes in local carriers even as it unveiled new rules to attract foreign investors into the world’s fastest growing major aviation market.
The government will allow foreign entities such as funds and portfolio investors to fully own local airlines, removing an earlier cap of 49 percent, it said in a statement on Monday. Prime Minister Narendra Modi’s administration, however, decided to bar foreign carriers from raising their stakes beyond 49 percent. Last week, India eased rules for local carriers keen to fly to overseas destinations.
The latest changes in foreign direct investment rules are unlikely to lure overseas investors until the government cuts red tape, according to Mark D. Martin, founder of Dubai-based Martin Consulting LLC. Setting up an airline in India involves multiple ministries and permits for aircraft registration, recruitment and parking slots. The revamp doesn’t allow Singapore Airlines Ltd. or AirAsia Bhd. to boost stake in their local ventures to gain full control.
“We’re not going to see anything earth-shattering anytime soon,” Martin said. “Red tape is still the biggest obstacle to aviation in the country and even if you own 100 percent, getting an airline off the ground is still the biggest challenge.”
Singapore Airlines has a local venture known as Vistara with the Tata Group, and AirAsia Bhd., the region’s biggest discount carrier, began domestic Indian flights in June 2014.
21/06/16 AJoT
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The government will allow foreign entities such as funds and portfolio investors to fully own local airlines, removing an earlier cap of 49 percent, it said in a statement on Monday. Prime Minister Narendra Modi’s administration, however, decided to bar foreign carriers from raising their stakes beyond 49 percent. Last week, India eased rules for local carriers keen to fly to overseas destinations.
The latest changes in foreign direct investment rules are unlikely to lure overseas investors until the government cuts red tape, according to Mark D. Martin, founder of Dubai-based Martin Consulting LLC. Setting up an airline in India involves multiple ministries and permits for aircraft registration, recruitment and parking slots. The revamp doesn’t allow Singapore Airlines Ltd. or AirAsia Bhd. to boost stake in their local ventures to gain full control.
“We’re not going to see anything earth-shattering anytime soon,” Martin said. “Red tape is still the biggest obstacle to aviation in the country and even if you own 100 percent, getting an airline off the ground is still the biggest challenge.”
Singapore Airlines has a local venture known as Vistara with the Tata Group, and AirAsia Bhd., the region’s biggest discount carrier, began domestic Indian flights in June 2014.
21/06/16 AJoT
