In what could prove to be a lifeline for the debt-laden aviation sector, the ministry of civil aviation will move a cabinet note to allow foreign airlines to take up 49% stakes in Indian carriers.
Civil aviation minister Ajit Singh made the announcement after meeting finance minister Pranab Mukherjee here on Tuesday. “The question was to allow other airlines to participate in foreign direct investment (FDI). I discussed it with the finance minister and he agreed,” Singh said. “We will move the note to the cabinet now.” India’s loss-making airlines are grappling with high jet fuel prices, low fares, and an economic slowdown.
Kingfisher Airlines has been struggling to pay employees and banks. SBI chairman Pratip Chaudhuri has told the finance minister that it would be difficult for them to further lend to Kingfisher."We realised that FDI is one of the factors that will help the industry survive the current financial problems," Singh said.
The government will also release Rs 150 crore to ailing Air India (AI) to pay for allowances and salaries to its employees.
Aviation ministry, sources said, would write to the finance ministry to release Rs 250 crore every month for AI. A section of AI pilots had last week refused to work to protest against non-payment of allowances.