Allow foreign carriers to invest in local ones

The current government policy on foreign direct investment (FDI) in aviation that bars foreign airlines from investing in Indian carriers is depriving the latter access to potential sources of capital and expertise, the Survey has said.

The current government policy on foreign direct investment (FDI) in aviation that bars foreign airlines from investing in Indian carriers is depriving the latter access to potential sources of capital and expertise, the Survey has said.

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"The FDI policy currently does not permit investment in foreign airlines that denies them access to potential sources of capital and expertise," it said.

One of the major challenges of the air traffic industry in India is the high and growing debt burden of the carriers, it noted. "The airline industry in India suffers from huge debt burden - close to $20 billion (estimated for 2011-12). Half of this debt is aircraft related and the rest is for working capital loans/payments to airport operators and fuel companies."

"High growth rates for the past few year in the aviation sector, particularly in the passenger segment, are not getting reflected in the financial health of the carriers in India. To manage the next growth phase safely and efficiently, significant and continuous investment will be required," the survey said.