Cabinet to take up proposal to allow 49% FDI by foreign airlines in Indian carriers

NEW DELHI: The government will make one more attempt to allow foreign airlines to buy stake in India carriers, a proposal that had been stuck due to opposition from MamataBanerjee'sTrinamool Congress.

The Union Cabinet could, as early as this week, take up a proposal to allow 49% FDI by foreign carriers such as Emirates and British Airways.

"The government is looking to push a set of reforms...FDI in aviation has been fast-tracked and could be taken up shortly," said a government official, adding that a cabinet note has already been circulated.

The decision is crucial to the aviation sector reeling under high debt, especially Vijay Mallya-owned Kingfisher that is finding going tough even after drastic reduction in capacity.

The three big airlines-Air India, Kingfisher and Jet Airway-reported combined accumulated losses of Rs 48,000 crore and have debt of nearly Rs 65,000 crore.


The current policy allows up to 49% FDI in airlines, but foreign carriers are not allowed to invest, keeping out the investors who would be most interested.

The proposal had been stuck due to inter-ministerial wrangling, as civil aviation ministry was initially keen on allowing up to 24% stake against at least 26% suggested by the commerce and industry ministry.

The two ministries agreed to 49% FDI after Ajit Singh took over as civil aviation minister, but ran into opposition from Trinamool Congress.

The proposal already has backing of the finance ministry.

FDI in aviation is among a slew of proposed reforms that could send out a strong signal about the intent of the scam-hit UPA to take tough decisions and perk up investment sentiment.