Prime Minister Manmohan Singh will meet officials from domestic private carriers on Saturday, Civil Aviation Minister Vayalar Ravi said today. The meeting assumes importance because most domestic carriers are facing financial crisis. Domestic airlines like Kingfisher, Jet Airways and Spicejet have all reported losses due to high costs of operation and rising crude prices.
While the agenda of the meeting is not known, a discussion on the proposal to allow foreign direct investment (FDI) by foreign airlines in Indian carriers might take place.
A draft Cabinet note by the Department of Industrial Policy and Promotion (DIPP) under the Commerce Ministry has recommended 26 percent foreign direct investment (FDI) by foreign airlines in domestic carriers. Anything below 26 per cent would not attract strategic investment from foreign airlines because in that case they will not have any powers to block a special resolution in a board meeting under the Indian company laws.
Current rules allow 49 per cent FDI in Indian aviation companies, but do not allow foreign airlines to own stake in India’s carriers.
Some airlines in India have opposed FDI because they worry that foreign partners will eventually take over the airlines they invest in.
Vijay Mallya, whose Kingfisher Airlines is in dire financial straits, has been urging the government to allow foreign airlines to invest in domestic carriers
Banks are finding it hard to extend more loans to India’s airlines – foreign investment could provide the assistance needed.
Earlier, the Prime Minister had backed a financial assistance to debt laden Kingfisher Airlines. "Private sector companies have to be managed efficiently but if they get into difficulties we have to find ways and means to get them out of the process," he had said.
While the agenda of the meeting is not known, a discussion on the proposal to allow foreign direct investment (FDI) by foreign airlines in Indian carriers might take place.
A draft Cabinet note by the Department of Industrial Policy and Promotion (DIPP) under the Commerce Ministry has recommended 26 percent foreign direct investment (FDI) by foreign airlines in domestic carriers. Anything below 26 per cent would not attract strategic investment from foreign airlines because in that case they will not have any powers to block a special resolution in a board meeting under the Indian company laws.
Current rules allow 49 per cent FDI in Indian aviation companies, but do not allow foreign airlines to own stake in India’s carriers.
Some airlines in India have opposed FDI because they worry that foreign partners will eventually take over the airlines they invest in.
Vijay Mallya, whose Kingfisher Airlines is in dire financial straits, has been urging the government to allow foreign airlines to invest in domestic carriers
Banks are finding it hard to extend more loans to India’s airlines – foreign investment could provide the assistance needed.
Earlier, the Prime Minister had backed a financial assistance to debt laden Kingfisher Airlines. "Private sector companies have to be managed efficiently but if they get into difficulties we have to find ways and means to get them out of the process," he had said.
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