Finance ministry puts aviation ministry in a tailspin

New Delhi: The finance ministry has put a spoke in the civil aviation ministry’s proposal to create a non-lapsable essential services fund, akin to the road development fund, for the aviation sector.
It said the proposal to set up such a fund out of a new cess would distort the prevalent economic paradigm in the sector, without any tangible benefit. Commenting on the draft civil aviation policy, the finance ministry has also opposed a proposal to retain the foreign direct investment limit in domestic aviation at 49%.
Instead, the ministry suggested that the question of raising the FDI cap as well as removing the present ban on foreign airlines’ acquiring equity in domestic airlines should be “left open” in the policy.
29/05/06 KG Narendranath/Financial Express

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