The government is likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers, industry secretary RP Singh said on Monday. “It is likely to happen,” he said.
The shares of Kingfisher, whose auditor had recently said that the airline needs fresh funds to remain viable, rose nearly 6% on BSE. Jet Airways rose 3.6%, while SpiceJet advanced 4%.
The Centre allows foreign investment of up to 49% in Indian carriers, but foreign airlines are not allowed to invest directly or indirectly in domestic carriers. The proposal will come as a lifeline to struggling domestic carriers saddled with high debt and mounting losses in a crowded and competitive aviation market.
The department of industrial policy and promotion and the civil aviation ministry differ on the quantum of stake that foreign airlines be allowed to pick up, government sources said.
While the industry ministry wants foreign airlines to be allowed to take 26% stake, the civil aviation ministry wants it capped at 24%, the sources said.