Govt veering towards 26% FDI ceiling in aviation

New Delhi: The government is done with inter-ministerial consultations on allowing foreign airlines to pick up stakes in Indian carriers, crossing even the Sebi takeover hurdle. Top official sources told DNA that the proposal is now ready and there is a broad consensus on capping the investment limit at 26%. “There is also a view that foreign airlines could be allowed to pick up more than 26% stake,” the sources said without elaborating.
To a specific query on whether any foreign airlines had come forward to look for investment opportunities after the FDI cap discussion, the sources added: “Private equity investors and some foreign airlines have been making enquiries. But contrary to the popular belief, not a single airline from the Gulf region has come forward as yet with any such interest.”
One of the concerns voiced by some Cabinet ministers earlier is Indian skies would become the monopoly of Gulf-based carriers like Emirates if these are allowed to invest in loss-making domestic airlines. “Which airlines in the world are cash rich or have the ability to acquire Indian carriers? Qatar Airways, Emirates, Etihad, Lufthansa and Singapore Airlines have the money to invest. But there are major security concerns relating to Gulf-based airlines as well as those from China,” a senior Cabinet minister had said.
24/12/11 Sindhu Bhattacharya/Daily News & Analysis

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Categories: Foreign Dec 2011, Indian Aviation- In General Dec 2011