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The government has decided to move swiftly to save the flagging aviation industry by liberalising rules on foreign investment. A draft cabinet note on foreign direct investment has put the FDI cap for foreign airlines at 26 per cent against 24 per cent proposed initially by the civil aviation ministry to the Department of Industrial Policy and Promotion (DIPP).
Currently, foreign direct investment upto 49 per cent is allowed in the aviation sector but foreign airlines are not allowed to invest in a domestic airline company. The cabinet note said that the existing restrictions need to be removed.
Meanwhile there are reports of security concerns that could again derail the Government's plans of allowing foreign airlines to pick up a minority stake in Indian carriers.
“There are still concerns in certain quarters about allowing investment from some countries. We cannot be selective about allowing country ‘A' to invest in a domestic airline but shooting down the proposal of country ‘B'. In the given scenario, the proposal to allow a foreign airline to invest in domestic carriers is likely to hit a road block at the moment,” a person in the know said.
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