Survey for foreign stake in airlines
"FDI policy currently does not permit foreign airlines investment that denies them access to potential sources of capital and expertise," said the survey presented by Finance Minister Pranab Mukherjee said in Parliament.
According to the present policy, foreign direct investment (FDI) up to 49 per cent is allowed in the aviation sector, but foreign airlines are not permitted to invest in Indian carriers.
It further applauded the government's decision to allow airlines import aviation turbine fuel (ATF) directly, as it would improve operational economies.
However, it added, "In the long run, airlines will need to improve their internal accruals, access to domestic and international capital, and their overall operations to remain vibrant and viable".
"Air carriers have been affected by the high ATF prices because of high incidence of taxes. The recent decision to allow them import of ATF will hopefully improve their operational economies," it said.
Cash-strapped domestic carriers, particularly Kingfisher, have been demanding permission for direct imports.
Listing the major challenges for the sector, which is facing turbulent times, the Survey said airlines were bogged down by high and growing debt burden.
"The airline industry in India suffers from huge debt burden -- close to USD 20 billion (estimated for 2011-12).
Half of this debt is aircraft related and the rest is for working capital loans payments to airport operators and fuel expenses," it