Draft cabinet note for 26% FDI in airlines

“Private airlines in the country are in dire need of funds for their operations and service upgradation to compete with other global carriers,” the note circulated by the Department of Industrial Policy and Promotion (DIPP) said.

The DIPP in the Industry Ministry has stuck to its guns suggesting FDI cap of 26 per cent and not 24 per cent, as proposed by the Civil Aviation Ministry. The DIPP feels anything below 26 per cent would not attract strategic investment from the foreign airlines.

The note has been circulated among the key ministries including the civil aviation, finance, home and and law. At present, FDI in domestic passenger airlines is allowed up to 49 per cent by overseas entities, other than the foreign airlines. Non-resident Indians can invest 100 per cent.

“Obviously the policy has not worked and it needs changes” the official said. Most private airlines have been seeking policy change for opening the crisis-ridden sector to FDI.

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