The Indian airline industry is expected to suffer a huge debt burden of $20 billion in 2011-12, with thePlanning Commission recommending "significant and continuous investment" to give a boost to the cash-strapped sector.
In what may sound music to the ears of the industry, the plan body favoured rationalisation of taxes on jet fuel and investment by foreign airlines in Indian carriers.
A working group of the plan body, which formulated the 12th Plan for the sector, said by not allowing foreign carriers to pick up stake in Indian airlines, access to potential sources of capital and expertise was being denied.
It proposed a projected total outlay for the sector at over Rs 54,743 crore for the entire plan period of 2012-17, including Rs 32,963.67 crore for Air India and Rs 17,500 crore for the Airports Authority of India.
Noting that half of the "huge debt burden" of $ 20 billion in 2011-12 was aircraft-related and the rest for working capital loans and payments to airport operators and fuel companies, the working group said the existing FDI policy "does not permit foreign airlines investment, thereby denying access to potential sources of capital and expertise".
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