Foreign investments in domestic airlines not favoured

Civil aviation minister Praful Patel today said that the civil aviation ministry is against allowing foreign airlines to invest in domestic carriers. He added that the ministry has also communicated this view to the finance ministry.

"We are against allowing foreign airlines to invest in domestic airlines. We are however, in favour of increasing the foreign investment limit to 49 per cent from the present 40 per cent," Patel said.

The civil aviation ministry is of the view that allowing foreign airlines to invest in domestic carriers will give a backdoor entry to foreign carriers.

Besides, it is also pointed out that the domestic carriers do not require the expertise from international airlines to run the airline business as they have good management capabilities.

Besides, the civil aviation ministry is also of the view that the domestic carriers have sound financial background to raise money from international funds when resources are required.

"Why should someone who has money be allowed to come in and pick up stake in the Indian aviation sector? That will give them a footprint on the Indian skies," he said.

Even domestic airlines have opposed the move of international carriers being allowed to invest in domestic airlines.

Both Jet Airways and Air Sahara have repeatedly called upon the civil aviation ministry in this regard. The finance ministry has favoured allowing of foreign airlines to invest in the Indian domestic aviation sector through the automatic route.

In the Budget, the United Progressive Alliance (UPA) government had proposed extending the foreign direct investment (FDI) limit from 40 to 49 per cent but kept out foreign airlines from acquiring stake in domestic carriers.

The high-powered Naresh Chandra committee, which was set up by the erstwhile NDA government, has also proposed a hike in the FDI limit in domestic aviation.