India's insular FDI policy in aviation to hurt sector: IATA

"Success of Indian airlines should not be compromised with an isolated policy. The insular approach to foreign direct investment (FDI) in aviation (is going) to hurt sector majorly," IATA Chief Giovanni Bisignani said at a CII Conference on Aviation here.

Giovanni further said that 10.3 per cent service tax imposed by the finance ministry on the aviation industry is illegal by International Civil Aviation Organisation rules.

The government has imposed a service tax of 10.3 per cent on the gross value of tickets of all classes on the domestic flights and economy class on international routes.

Speaking on the occasion Kingfisher Airlines Chairman Vijay Mallya expressed disappointment that there is still no comprehensive policy on the aviation sector.

The industry ministry is learnt to be opposed to allowing foreign airlines buying stake in Indian carriers due to security reasons.

Besides, the view in the Department of Industrial Policy and Promotion (DIPP)is that no other major country permits investment by foreign airlines into their domestic operators.