New Delhi:
The government opened 100 per cent foreign direct investment (FDI) in aviation sector on Monday in a decision that came after dire warnings against compromising nation’s security by allowing foreign play in a highly sensitive sector. But this 100 per cent FDI allowance can bring remarkable changes in near future also.
Welcoming the government’s move, aviation experts believe that the decision would help carriers bring in much-needed cash, expand aircraft fleet and adopt best practices.
Under the new FDI norms, foreign investors, barring overseas airlines, can now have up to 100 per cent stake in local carriers, while equity holding remains restricted at 49 per cent.
According to PMO statement, “As per the present FDI policy, foreign investment upto 49 per cent is allowed under automatic route in scheduled air transport service/domestic scheduled passenger airline and regional air transports service. It has now been decided to raise this limit to 100 per cent, with FDI upto 49 per cent permitted under automatic route and FDI beyond 49 per cent through government approval.”
In the reforms announced on June 20, government has also permitted 100 per cent FDI in brownfield projects through automatic route. Presently, 100 per cent FDI is allowed through the automatic route in greenfield airport projects, while it is 74 per cent in brownfield ones.
The opening of FDI also comes with a view to aid in modernisation of the existing airports, establish a high standard, help ease the pressure on the existing airports.
The Indian arm of the Sydney-based aviation think-tank Centre for Pacific Aviation (CAPA) also welcomed the government's decision to liberalise FDI regime for brownfield airports and said that India needs USD 30- 40 billion capital to modernise airport infrastructure in next 10-15 years.
