Govt may allow part of FDI in domestic airlines
A proposal to permit foreign airlines to pick up stake in domestic carriers is among the several measures being considered by the government to help the Indian aviation industry overcome the financial crunch.india Updated: Jan 14, 2009 13:37 IST
A proposal to permit foreign airlines to pick up stake in domestic carriers is among the several measures being considered by the government to help the Indian aviation industry overcome the financial crunch.
"There are various options before the government as to how to support the (aviation) industry, We already have 49 per cent FDI cap in the aviation sector.
"May be the time has now come to explore whether foreign airlines can be permitted to invest part of that 49 per cent in the domestic sector," Civil Aviation Minister Praful Patel told reporters in New Delhi.
Describing it as "only a thought process", he said "no formal decision has been taken, nor any note moved" on the issue.
He said such options were being considered to improve the financial health of the aviation sector and to attract more investment as the "financial markets do not seem to support" the cash-strapped industry at the moment.
Official sources have said the government was toying with the idea of allowing foreign airlines to pick up between 20 and 25 per cent stake in Indian carriers.
While the proposal has been strongly backed by Kingfisher Airlines promoter Vijay Mallya, premier British carrier Virgin Atlantic Airways has also written to the government on the matter several months ago.
However, industry sources said other domestic carriers were not in favour of such a move as they feel that a foreign carrier, with deep pockets, could play havoc with the domestic market by artificially lowering the price of air travel and cut down competition.