Govt to hike FDI cap in cargo carriers

The civil aviation ministry has proposed to raise the limit to 74% from current 49%.

The Ministry of Civil Aviation (MoCA) is planning to increase the foreign direct investment (FDI) limit in cargo carrier companies to 74 per cent from the current 49 per cent.

Union Civil Aviation Minister Praful Patel said the proposal had been included in the proposed new civil aviation policy, named Vision 2010.

"The Ministry of Commerce (MoC) and Foreign Investment Promotion Board (FIPB) are looking at the proposal. We are expecting it will be notified shortly," Patel told reporters on the sidelines of the launch of Air-India's dedicated cargo operations to Europe.

Patel said with the kind of economic growth being witnessed by India, it should need at least 500 cargo aircraft in the next 10 to 15 years.

Asked if the number wasn't too ambitious, the minister said the country needed to think big to provide adequate logistics support to booming trade.

"We are also planning to set up a cargo hub at Nagpur which would be positioned as the national cargo hub. We are planning to create more infrastructure through private public partnership, which will be unveiled in the new civil aviation policy," he said.

Earlier, Patel flagged off Air-India's first dedicated freight aircraft to Europe. "The first converted aircraft (passenger to cargo) to be deployed on a European route (Mumbai/Bangalore/Damam/Frankfurt/Damam/Mumbai) has begun operations. The freighter (Airbus A 310 aircraft) will make four trips a week via Bangalore and Chennai to Frankfurt and Paris," said Air-India Managing Director Vasudevan Thulasidas.

Two A310 passenger aircraft have so far been converted into freighters for dedicated cargo operations. The conversion of A310s into freighters was undertaken by the global leader in military transport and freighter aircraft, European Aeronautic Defence & Space Company (EADS). The cost of the conversion of each aircraft is $7.9 million.

Air-India's current market share in the export segment is in the range of 9-11 per cent and it is 5-7 per cent in the import segment.