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Govt open to tweak aviation FDI policy : FM

, November 19, 2012, 0 Comments

Finance Minister P. Chidambaram, indicated that the government is open to tweaking its foreign direct investment policy for the aviation sector.

FDI in aviation

The government had in September allowed foreign carriers to buy up to 49% stake in domestic airlines. The sector has, however, yet to see any action although there had been talks about airlines being in negotiations with potential investors before the government’s decision.

Government have allowed 49%. Let us see whether there are potential investors. These are executive decisions, they can always be tweaked – P. Chidambaram

All three listed Indian carriers, Jet Airways, Indigo, SpiceJet as well as now ailing and defaulting Kingfisher Airlines are said to be on the lookout for investment from a foreign carrier.

There are more important issues besides enabling regulation to own 51% from 49%. Highlighting the management control as key issue as any willing buyer will surely would like to to yield control.

Before FDI reform took place in September, only overseas investors were allowed to invest in Indian carriers but not foreign airlines. Domestic carriers lost a combined $2 bln in 2011-12 as profits got impacted due to high taxes, steep fuel cost and a drop in passenger traffic.