INSUBCONTINENT EXCLUSIVE:
Relaxation in FDI rules for airlines may help generate interest among foreign playersNew Delhi: Seeking to ensure aviation biggies
participate in the bidding for Air India sale, the government may dilute substantial ownership and effective control (SOEC) clause in the
FDI guidelines for the airline sector.Official sources said the Department for Promotion of Industry and Internal Trade (DPIIT) has been
discussing the proposal with the Civil Aviation Ministry.The present FDI rules allow up to 100 per cent FDI in domestic carriers but the
investment by a foreign airline is capped at 49 per cent
Further, substantial ownership and effective control has to be in the hands of Indians.In most of the aviation-related activities such as
ground-handling, greenfield airports and Maintenance, Repair, Overhaul (MRO), FDI is allowed up to 100 per cent through the automatic
route.Relaxation in FDI rules for airlines may help generate interest among foreign players keen to get a foothold in the Indian market.As
the government's bid to sell majority 76 per cent stake in Air India failed last year with not a single private firm showing interest, the
dilution in FDI norms could encourage foreign airlines and other investors to participate in the bidding this time."We would make sure that
disinvestment of Air India happens this time
All necessary steps would be taken
The issue of relaxing FDI guidelines has been there
We are examining it," said a government official wishing not to be named.The government is making all-out attempt to completely exit Air
Finance Minister Nirmala Sithraman has set March 31, 2020 as the deadline for Air India disinvestment.Civil Aviation Minister Hardeep Singh
Puri last week said that Air India would be shut down if the disinvestment bid fails this time, hinting the government would go the extra
mile to sell the debt-laden carrier.Air India has sucked nearly Rs 30,000 crore of taxpayers' money since April, 2012 but has failed to
improve either on operational or financial parameters
The airline's on-time performance (OTP) across four metros of Delhi, Mumbai, Hyderabad and Bangalore was 54.3 per cent in October.The
government has been very liberal in opening various sectors for FDI and is unlikely to hesitate on further relaxing the conditions for the
airline sector.Presenting the Union Budget in July this year, Finance Minister Nirmala Sitharaman had said the government would invite
suggestions for further opening up of FDI in the aviation, media, animation AVGC and insurance sectors
Subsequently, the government eased FDI rules in retail and media
Aviation may be the next on the government's agenda.
