Government proposes 49pc FDI in airlines

In a move that is seen as a lifeline to India’s loss-making aviation sector, the government is considering allowing foreign airlines to pick up 49 per cent stake in domestic carriers.

The issue was discussed in a meeting between Finance Minister Pranab Mukherjee and Civil Aviation Minister Ajit Singh on Tuesday. Singh said a Cabinet note will be moved soon on the issue.

The government may also release Rs 150 crore to Air India to enable the national carrier to pay wages, according to the minister.

A final decision on allowing foreign airlines to pick up stake in Indian carriers will be crucial, according to experts, especially at a time when many domestic airlines have been deep in debts and require a sizeable infusion of cash, which is not available in the domestic market.

High jet fuel prices, low fares and economic slowdown have also affected the aviation industry in India in recent times.

Many international carriers such as British Airways, Singapore Airlines and Air Asia have evinced interests in investing in Indian carriers.

But, India does not allow foreign carriers to buy Indian airlines. Foreign investors can, however, invest up to 49 per cent stake.