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Government likely to move ahead with FDI in aviation today

CNN-IBN
Sep 14, 2012 at 08:30am IST

New Delhi: After months of dithering, the government could finally clear Foreign Direct Investment (FDI) in aviation when the Cabinet committee on economic affairs meets on Friday. Aviation sector in India has not being doing well. Several airlines like the Vijay Mallya-owned Kingfisher Airlines are struggling but that doesn't mean that there is no demand.

The carriers in the Middle East like Qatar and Emirates understand the dynamics of the Indian market. They have been taking passengers flying them out to Dubai going to other locations and then flying them out to Europe and the US so there is an interest and thus these airlines will certainly be looking at increasing their footprints.

Industry sources say these airlines will be the first to come in and take the stake in carriers such as Kingfisher or SpiceJet.

At present, India allows foreign investors, not related to airline business, to buy up to 49 per cent stake in domestic airlines but foreign carriers are not permitted to invest.

The government had initiated the process in January but key UPA ally Trinamool Congress (TMC) was opposed to it.

Cash-strapped Kingfisher Airlines, which is burdened with a debt of over Rs 7,000 crore, has been in the forefront of pushing for permission to allow foreign airlines to invest.

With Additional Inputs from PTI

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