In a bid to bring in money and expertise to help its ailing aviation sector, India’s civil aviation ministry has proposed allowing international airlines to acquire stakes of up to 49% in the country’s airlines.
“We all know the aviation industry is facing a lot of stress,” says Civil Aviation Minister Ajit Singh. “FDI [foreign direct investment] is one of the factors that will help the sector in this financial stress.”
Currently, the government allows FDI of up to 49% in Indian carriers by non-airline investors, but bars foreign airlines from direct investment for security reasons. As an initial step in changing the rule, a draft note proposing the 49% cap on foreign-carrier FDI will be circulated in the federal cabinet by the civil aviation ministry, Singh says. The cabinet will then look into the issue.
“The question was about allowing other airlines to participate in FDI. I discussed it with the finance minister and he has agreed,” Singh says. “We will bring out a note for the cabinet now.”
The commerce ministry’s department of industrial policy and promotion had earlier suggested a 26% cap.
A number of international carriers, including, and Air Asia, among others, have shown interest in investing in Indian carriers.