The commerce and civil aviation ministries have agreed on allowing foreign airlines to pick up stakes in Indian airline companies but they still have to take a call on whether the FDI cap would be 24% or 26%. The two ministries are slated to discuss the matter soon.
Talking to FE, commerce and industry minister Anand Sharma said: “A proposal has come from the civil aviation ministry and it is receiving our active consideration. A (Cabinet) note will be circulated only after the inter-ministerial consultations.”
Last month, the civil aviation ministry had written to the Department of Industrial Policy and Promotion (DIPP) agreeing to equity participation by foreign airlines in domestic carriers, proposing to allow foreign airlines to invest up to 24% in local carriers within the existing cap of 49% for foreign investors.
However, DIPP is not happy with the aviation ministry’s proposal of 24%cap and had suggested a minimum of 26%.
A top DIPP official had told FE that below 26% stake would not suffice to attract investors (foreign airlines).
Meanwhile, on being asked if the ministries were speeding up the FDI proposal, considering the ongoing Kingfisher crisis, Sharma said : “It is not so, a proposal had been lying with the two ministries long back and now that the civil aviation ministry has suggested a move, it is now under consideration.”
