In a move aimed at addressing concerns in the west about stalled economic reforms, India mentioned plans to allow foreign carriers to own as much as 49% in Indian airlines. It also said efforts are underway to deal with resistance to foreign direct investment in multi-brand retail since many in
the west had waited a long time for it.
The Union government has written to chief ministers opposing it, such as Mamata Banerjee, hoping to bring them around.
"Opening up FDI in multi-brand retail will bring in much needed investments, technology and efficiency to unlock the true potential of the agricultural value chain," Anand Sharma, commerce minister wrote to Odisha chief minister Naveen Patnaik in June.
"A decision will be taken soon (on FDI in Indian aviation industry)," Sharma told The Wall Street Journal in an interview. The placement and timing of these announcements in a US newspaper shortly after US president Barack Obama said India needs to do more on reforms is interesting.
India allows foreign companies such as an investment bank, Goldman Sachs to own 49% in Indian airlines but not a foreign carrier. That is going to change. Many Indian airlines are in trouble including the perennially loss-making state-run Air India and some may welcome foreign investments to shore up their resources. Only one of the six commercial airlines makes profits.
India had announced last year that it was allowing 51% foreign direct investment in multi-brand retail, which would facilitate the entry of big-box chains such as Wal-Mart. India allows now 100% foreign investment in the single-brand category; Swedish furniture giant Ikea announced last month a multi-billion dollar investment plan for India.
But multi-brand has been an entirely different story.