Aviation FDI: Panel to take up ministry proposal

NEW DELHI: Cabinet secretary KM Chandrasekhar may take up the civil aviation ministry���s proposal to allow foreign airlines to pick up to 25% stake in domestic airlines on Friday, a government official has said. The move would pave the way for foreign airlines such as Singapore Airlines, British Airways and Lufthansa to buy equities in home-grown carriers like Kingfisher, SpiceJet and IndiGo.

The ministry has already prepared a note on this, seeking government approval to change the existing policy on foreign direct investment (FDI) in domestic carriers. ���A committee of secretaries (CoS) headed by the cabinet secretary would consider the aviation ministry���s proposal to allow foreign carriers to hold up to 25% stake in domestic airlines,��� a government official, who did not wish to be named, said.

The aviation ministry is learnt to have discussed the proposal with Department of Industrial Policy and Promotion (DIPP) and received its consent. In fact, the DIPP is open to allowing up to 49% stake by overseas carriers in the domestic airlines, the official said. He, however, added that foreign airlines would initially be allowed to pick up not more than a 25% stake.

Vijay Mallya-promoted Kingfisher Airlines had recently pitched for allowing FDI by foreign airlines in a bid to raise funds. The present guidelines on FDI allow foreign airport operators, flying training service providers and ground handlers to invest in their respective domestic segments. It, however, bars overseas airlines from investing in the local airlines. Foreign companies, other than airlines, are currently allowed to hold a stake of up to 49% stake in domestic carriers.