By IANS,
New Delhi : The civil aviation ministry Thursday said it has proposed a cap of 24 percent on foreign direct investment (FDI) by international airlines in domestic carriers, but the final decision lies with the cabinet.
“The ministry has proposed a cap of 24 percent investment by foreign airlines in domestic airlines,” a senior official said on condition of anonymity.
“But the decision lies with the cabinet, as it is a policy matter. The cabinet will take a decision on it in couple of weeks,” the official added.
The development came as chairman of cash-strapped Kingfisher Airlines Vijay Mallya pitched for the entry of FDI into the airline sector.
“I am an avid supporter of FDI. I don’t see any reason why FDI from strategic partners like an airline should be banned or not permitted. Who would understand an airline better than another airline,” Mallya said at a press conference in Mumbai.
The ministry’s decision is even more significant in light of the fact that recently the Department of Industrial Policy and Promotion (DIPP) proposed a 26 percent cap.
“Whatever decision the government takes, everyone will accept,” the official admitted.
Currently, the government allows for an FDI intake of 49 percent in Indian carriers by non-airline players but bans foreign airlines from directly investing due to security reasons.
Industry sources say the fresh infusion of investment would give a lifeline to the struggling sector which bears the brunt of high jet fuel prices caused by state-levies and the high interest cost of their debt.