Indian carriers hoping to attract investments from foreign airlines may have to wait longer as the government is yet to finalise its stand on a civil aviation ministry proposal sent three years ago. The proposal to allow foreign airlines to invest in a domestic airline is being examined, official sources said, adding that no guidelines have been worked out. 

Currently, FDI up to 49 % is allowed in domestic airlines or 100 % for investments by NRIs, but foreign airlines are barred from investing primarily on security grounds. The civil aviation ministry had in 2008 proposed to the Department of Industrial Policy and Promotion to allow 26 of the total 49 % FDI by foreign airlines that would enable their presence on the Boards of the Indian carriers in which they invest.

But the ministry has opposed another proposal to allow foreign carriers to invest the entire 49 % FDI, instead of 26 % as suggested by it. There is also a strong feeling that fledgling Indian carriers were susceptible to hostile takeovers as they have been passing through a difficult financial period.

The proposal to allow foreign carriers to invest in domestic airlines has been strongly backed by Kingfisher Airlines promoter Vijay Mallya as well as some foreign carriers.

But, Indian carriers like Jet Airways are opposed to such a move as they feel that a foreign carrier, with deep pockets, could play havoc with the domestic market. They could also artificially lower the price of air travel to kill domestic competition.

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