Union Minister Jayant Sinha today said the government is working on "appropriate policies" related to 100 per cent FDI in airlines, amid local carriers opposing the move.
Union Minister Jayant Sinha today said the government is working on “appropriate policies” related to 100 per cent FDI in airlines, amid local carriers opposing the move. The Minister of State for Civil Aviation also said the Ministry has not yet received any formal application from any airline with respect to 100 per cent FDI. His remarks come against the backdrop of Qatar Airways recently announcing its plans to set up an airline in India after the Indian government allowed 100 per cent foreign direct investment in the airlines segment last year.
The Federation of Indian Airlines (FIA) — comprising Jet Airways, SpiceJet, IndiGo and GoAir — have been vociferous about their opposition to foreign entities being allowed to invest in local carriers. “There are various opinion on this matter of 100 per cent FDI. We are considering what the Indian airlines through FIA are saying. “Of course, the government’s policies are such that we do welcome 100 per cent FDI but we are working through the exact registration process and all of the appropriate policies around that. That is under evaluation,” Minister of State for Civil Aviation Jayant Sinha told reporters here.
Noting that the policy to allow 100 per cent Foreign Direct Investment (FDI) in domestic airlines is “probably not appropriate”, SpiceJet CMD Ajay Singh said that such kind of policies must be allowed on a reciprocal basis. “If an airline of a particular country wants 100 per cent FDI in our country then they must also be prepared to give 100 per cent FDI in their own countries… If that is not allowed then it is an unfair situation and it is not a level playing field,” he said.
He also noted that there is a huge shortage of airport infrastructure and foreign airlines entering the Indian market would add to that burden.
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There is a need to develop Indian metros like Delhi, Mumbai and Hyderabad into international hubs but with foreign carriers coming in “they will shift traffic to their hubs and develop those hubs and that is not in the long-term interest of this country”, Singh said.FIA has already raised its concern with the government over the move. “We have conveyed to them that we are opposed to 100 per cent FDI… We have given our views and it is for them to take appropriate steps,” Singh said.
Qatar Airways Chief Executive Officer Baker Al-Baker, on March 8, announced in Berlin plans to establish an airline in India. “We are joining hands with the investment arm of State of Qatar to start a domestic airline in India with a 100 per cent investment,” Al Baker had said. On whether the Civil Aviation Ministry has received any application from Qatar Airways, Sinha said, “as of now, we have not received any formal application from any airline about 100 per cent FDI”.
In June 2016, India allowed foreign investors — barring overseas airlines — to own up to 100 per cent stake in local carriers by liberalising FDI regulations. Currently, foreign airlines are allowed to invest only up to 49 per cent in Indian carriers.
However, the revised norms provide room for overseas airlines to partner with a foreign non-airline player to set up a 100 per cent foreign-owned carrier in India. While the FDI norms have been relaxed, the government is yet to amend the regulations with respect to Air Operator Permit (AOP). At present, AOP is granted only to an airline where substantial ownership is with Indian entities.