The government on Monday allowed 100% FDI in airlines and relaxed norms for overseas investments in brownfield airports.
The move comes less than a week after unveiling the national civil aviation policy.
Now, 100% foreign investment will be allowed in “scheduled air transport service/domestic scheduled passenger airline and regional air transport service”, an official release said.
Only non-airline players will be allowed to bring in 100% FDI in local carriers.
Under the new setup, 49% will be through the automatic route and for anything beyond, government nod will be required. At present, up to 49% FDI is permitted in scheduled airlines.
“For NRIs, 100% FDI will continue to be allowed under the automatic route,” the release said.
“However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49% of their paid-up capital and subject to the laid-down conditions in the existing policy.”
However, maintaining the status quo, foreign airlines will be allowed to invest only up to 49% in Indian carriers.
The decision to relax FDI norms was taken at a meeting chaired by Prime Minister Narendra Modi in New Delhi on Monday.
With regard to airports, the government has permitted 100% FDI in brownfield projects through the automatic route.
Demolishing/ remodelling an existing airport to build a new one is called Brownfield airport project.
Currently, 100% FDI is allowed through the automatic route in greenfield airport projects while it is 74% in brownfield ones.
“With a view to aiding in modernisation of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100 per cent FDI under automatic route in brownfield airport projects,” the release said.
Back in 2012, then UPA government had permitted 49 per cent FDI in domestic airlines by foreign carriers. The move paved the way for setting up of two new airlines -- Vistara and AirAsia India -- and investment by Etihad Airways in Jet Airways.
Vistara is 49% owned by Singapore Airlines while Malaysia’s AirAsia Berhad has 49% stake in AirAsia India. In both carriers, the Tatas have a substantial stake.