Government to fast-track proposal for FDI in aviation

The fast track proposal to allow foreign airlines to invest in domestic airlines by the Government ended its Parliament session on May 22. In January 2012 that the Ministry for Civil Aviation announced a “broad consensus” in the Government on allowing foreign airlines to acquire an up to 49 per cent stake in domestic airlines. However, the proposal is yet to be approved by the Government.

When the sector was first opened in the early 1990s, the Government allowed foreign airlines to invest in domestic airlines.

It is rumoured that a number of domestic airlines have informally approached the Ministry of Civil Aviation, seeking that the proposal be pushed through at the earliest.

Besides, a number of global private equity funds that traditionally have a stake in several leading international airlines have also been making discreet inquiries from the Ministry on the issue. Official sources said that foreign investment in Indian carriers is being given a thrust right now because most domestic airlines are bleeding and banks in India are reluctant to fund most of them. So, there are only a few options left to keep them afloat. Even as the Government starts the process of implementing a change in policy, there has been a steady stream of chief executive officers and owners of global airlines visiting the Ministry of Civil Aviation.

Each proposal by a foreign airline will have to be cleared by the inter-ministerial Foreign Investment Promotion Board (FIPB). With the Ministry of Home being a part of FIPB, any proposal considered against India’s security interests will be blocked, officials said.