Cabinet to take up aviation FDI

FDI in domestic private airlines likely to be hiked to the extent of 49%.

While telecom has been put in cold storage, the issue of raising the foreign direct investment (FDI) cap in civil aviation could come up at the cabinet meeting slated for tomorrow.

Left parties are already preparing their reactions to a civil aviation ministry proposal that could hike the FDI limits in the sector.

The cabinet is likely to clear FDI in domestic private airlines to the extent of 49 per cent. The Left's green light to this proposal is contingent on a promise that the government's stake in Indian Airlines and Air-India will not be divested in the process.

But the Left is conscious of the limited leverage it has, should the government hike the FDI caps in telecom. Senior Left leaders admit in private that there is not much they could do if the government proceeds to push the telecom papers through the cabinet route.

"After all, it is their government. We have made our stance clear, (but) if they choose to disregard it, there is only so much we can do about it," a senior Left leader said.

However, the government appears keen to humour the Left. Telecom is not on the agenda of the cabinet scheduled for tomorrow. Left sources said it would stay off the agenda of the next UPA-Left coordination meeting as well.

Also, at the finance minister's luncheon meeting with the Left parties about a week back, the government agreed that it would not privatise profit-making PSUs.

The prime minister's announcement of tabling the Employment Guarantee Scheme in the winter session of parliament, the creation of a non-lapseable fund for elementary education, preparations for a food-for-work scheme, the setting up the Board for Reconstruction of PSUs, a board for the unorganised sector and an investment commission with no representation form big corporate entities, are signals from the government that the views of its allies is being considered.

Congress MP Jairam Ramesh who was present at the lunch meeting for Left parties hosted by Finance Minister P Chidambaram at his residence, said there was no urgency to hike FDI cap in telecom. This should be read in the general context of government trying to reach out to the Left.

Hiking FDI caps in telecom remains a touchy topic. The finance minister is to reply to the Left 'note' on telecom. Left leaders are saying that the reply will constitute the Government's first formal response on the matter and is likely to lay out the terms of the formula directed at allaying the Left's apprehensions about security concerns and foreign monopoly.

DoT's proposal that the minority Indian stake holder in the telecom firm should have 50 per cent voting rights is seen to be legally untenable.

The other proposal which suggests that the board of the telecom venture should only have should Indian citizens, has been met by criticism from the Left.

The Left contends that such a move will not ensure that the control of the company remains in Indian hands as the top management in several multinational companies has Indians on it.