Aviation FDI: Govt open to tweaking?

Nov 19 2012, 11:16 IST
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SummaryWhat is there to tweak, we have allowed 49%: Chidambaram

Government may be open to tweaking FDI norms in the aviation sector to attract investment, for which there has to be "willing buyer and a willing seller", Finance Minister P Chidambaram said today.

"What is there to tweak, we have allowed 49 per cent. Let us see whether there are potential investors. These are executive decisions, they can always be tweaked," he said.

"See, merely because you raise it (the 49 per cent limit) to 51 per cent does not mean somebody is going to come. There may be a willing buyer, there has to be a willing seller also. The Indian company must be willing to yield control. And (there is) no evidence of that. There are only half a dozen players in the sector," Chidambaram said.

He was asked whether there was a possibility of tweaking the FDI norms for the aviation sector due to the lack of response so far.

Under the changes brought about by the government in the FDI norms in September, foreign carriers were allowed to pick up stake of up to 49 per cent of paid-up capital in domestic airlines.

Earlier, FDI of up to 49 per cent was allowed in Indian carriers but foreign airlines were barred from investing in air transport services.

Apart from the airlines, 49 per cent FDI was allowed in cargo handling, 75 per cent in business aviation and 100 per cent in greenfield airports, seaplanes and other areas.

In spite of this policy, the total FDI inflow into the air transport sector between January 2000 and April 2012 was merely USD 434.75 million, which was 0.25 per cent of the total FDI inflows into the country.

In response to questions on the issue, industry sources said it would have to be seen how many airlines were willing to give up ownership rights if 51 per cent stake was offered to foreign investors.

They said the impact of such a move on the ownership pattern could also affect the recognition of an airline as a 'designated' Indian carrier, which is an essential requirement for foreign operations under the bilateral air services agreements.

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