India has decided to allow overseas entities--excluding airlines--to own 100% in domestic airlines as it seeks greater foreign direct investment (FDI) inflows into the country. This is against the current 49% FDI limit under the automatic route in domestic airlines (scheduled air transport service/domestic scheduled passenger airline and regional air transport service).
It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under the automatic route and FDI beyond 49% through government approval. For non-resident Indians (NRIs), 100% FDI will continue to be allowed under the automatic route.
Here's how the new rules will play out for different entities and investment scenarios.
Foreign airlines
While the foreign airlines are keen to have a 100% stake in Indian airlines, they have been excluded.
Investment by foreign airlines in domestic airlines will be limited to 49% of paid-up capital, the government said on Monday.
The Indian market is wooing foreign airlines.
India's domestic traffic soared 21.8% in April, marking the 20th month of double-digit growth and the 13th consecutive month in which it led traffic in domestic markets worldwide.
According to the International Air Transport Association (IATA), which represents some 260 airlines that make up 83% of global air traffic, growth in India is being propelled by a comparatively strong economic backdrop as well as by a substantial increase in service frequencies.
21/06/16 PR Sanjay/Mcclatchy/AviationPros
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It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under the automatic route and FDI beyond 49% through government approval. For non-resident Indians (NRIs), 100% FDI will continue to be allowed under the automatic route.
Here's how the new rules will play out for different entities and investment scenarios.
Foreign airlines
While the foreign airlines are keen to have a 100% stake in Indian airlines, they have been excluded.
Investment by foreign airlines in domestic airlines will be limited to 49% of paid-up capital, the government said on Monday.
The Indian market is wooing foreign airlines.
India's domestic traffic soared 21.8% in April, marking the 20th month of double-digit growth and the 13th consecutive month in which it led traffic in domestic markets worldwide.
According to the International Air Transport Association (IATA), which represents some 260 airlines that make up 83% of global air traffic, growth in India is being propelled by a comparatively strong economic backdrop as well as by a substantial increase in service frequencies.
21/06/16 PR Sanjay/Mcclatchy/AviationPros
