Cabinet to consider FDI in aviation today
Notwithstanding resistance by allies, government is determined to push economic reforms with the Cabinet set to take up on Friday proposals for allowing FDI in aviation and trading exchanges besides raising its cap to 74% in various segments of broadcast sector.delhi Updated: Sep 14, 2012 09:21 IST
Notwithstanding resistance by allies, government is determined to push economic reforms with the Cabinet set to take up on Friday proposals for allowing FDI in aviation and trading exchanges besides raising its cap to 74% in various segments of broadcast sector.
The Cabinet will also consider a proposal for disinvestment in seven PSUs, including National Aluminium Limited Company (NALCO), Steel Authority of India Limited (SAIL) and Mines and Minerals Trading Corporation (MMTC), to the tune of Rs. 15,000 crore.
Sources said the Cabinet will take up a proposal for allowing foreign airlines to pick up stakes in Indian carriers, a long-pending demand of the domestic industry to give a boost to the sector.
At present, India allows foreign investors, not related to airline business, to buy up to 49 percent stake in domestic airlines but foreign carriers are not permitted to invest.
The government had initiated the process in January but key UPA constituent Trinamool Congress was opposed to it.
Cash-strapped Kingfisher Airlines, which is burdened with a debt of over Rs. 7,000 crore, has been in the forefront of pushing for permission to allow foreign airlines to invest.
Among other proposals slated for consideration tomorrow is the one on raising the cap of FDI to 74% in broadcast sector across the board.
The Department of Industrial Policy and Promotion (DIPP) has proposed that FDI limit in the broadcast carriage services providers, including Direct-to-Home, Head-end in the Sky (HITS) and cable TV must be uniform.
HITS is a satellite multiplex service that provides TV channels for cable operations.
At present, 49% FDI is allowed in cable TV and DTH while it is 74% in HITS.
However, for TV news channels, FM radio and content providers, the FDI limit will stay at 26%, as per the DIPP proposal.
Among different segments, 74% foreign direct investment (FDI) would be considered in mobile TV, which is an area of future growth.
India is estimated to have about 106 million households with cable and satellite TVs in India, of which 26 million use DTH and 80 million get feed from the cable network.
A proposal for allowing FDI in trading exchanges is also expected to be considered by the Cabinet.
Besides, the Cabinet Committee on Economic Affairs will consider proposal for disinvestment in public sector undertakings, including MMTC, SAIL, Hindustan Copper, Oil India and NALCO.
The Department of Disinvestment (DoD) has proposed 10% stake sale of Oil India and another 9.59% disinvestment of Hindustan Copper.
Further, a 5% stake sale of Neyveli Lignite and 12.15% of NALCO through Offer for Sale (OFS) route is likely to be taken up by the CCEA.
Also, the proposal of disinvesting 9.33% in MMTC is expected to be taken by the CCEA, they added.
The disinvestment in these companies is expected to fetch the government around Rs. 15,000 crore.
The Department of Disinvestment (DoD) has already invited expression of interest from merchant bankers for managing the issues.
Although five months have passed in the current fiscal, the government has not been able to come out with a single public issue.
Raising adequate funds from disinvestment was necessary to keep in check the fiscal deficit which is facing pressure due to rising food, fuel and fertiliser subsidy bill.