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Air India's demand for equity infusion finds favour with PM

india Updated: Aug 08, 2009 20:37 IST

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Cash-strapped Air India's demand for equity infusion on Saturday received support from Prime Minister Manmohan Singh, who also lent a 'sympathetic' ear to the problems faced by the Indian aviation industry.

Civil Aviation Minister Praful Patel met Singh and briefed him about the problems of the airline industry which has been protesting the high rates of sales tax imposed by various state governments on aviation turbine fuel (ATF) and seeking lowering of airport charges.

Patel also briefed Singh on the proposal to set up a new Advisory Board for Air India, which is expected to comprise eminent personalities and professionals to guide the national carrier out of its financial trouble.

While an "early decision" on the new Board was expected, an official spokesperson said the prime minister was also 'supportive' of the airline's demand for equity infusion.

The airline currently has an equity base of only Rs 145 crore and has placed orders for 111 aircraft worth Rs 50,000 crore. Sources said the government could consider infusing an additional equity of Rs 9,500 crore.

At the meeting of the Union Cabinet next Thursday, Patel is expected to make a detailed presentation on the concerns of the civil aviation sector, the sources said.

They said the Civil Aviation Ministry is likely to suggest the setting up of a group of ministers to resolve the problems faced by the aviation industry, especially on account of high taxes on jet fuel, in a time-bound manner.