Security
concerns to be addressed by strict screenin
New Delhi, May
20:
The Government
plans to fast-track the proposal to allow foreign airlines to invest in
domestic airlines once the ongoing Parliament session ends on May 22.
It was in
January this year that the Civil Aviation Ministry had announced a “broad
consensus” in the Government on allowing foreign airlines to acquire an up to
49 per cent stake in domestic airlines. But the proposal is yet to be approved
by the Government.
At the moment,
the proposal is undergoing inter-Ministerial consultations before it is brought
to the Union Cabinet for final approval. Official sources confirmed to Business
Line that the proposal will be accelerated soon after the Parliament session
is over.
The Indian
Government used to allow foreign airlines to invest in domestic airlines when
the sector was first opened in the early 1990s. At least three West Asian
carriers, including Kuwait Airways and Gulf Air had invested in Jet Airways. However,
when the policy was changed and foreign airlines were banned from having a
direct or indirect stake in domestic airlines, the foreign airlines' stake was
bought by Jet Airways.
Growing
interest
Officials
claimed that, contrary to the public posturing, a number of domestic airlines
have informally approached the Ministry of Civil Aviation, seeking that the
proposal be pushed through at the earliest. Besides, a number of global private
equity funds that traditionally have a stake in several leading international
airlines have also been making discreet inquiries from the Ministry on the
issue.
Official
sources said that foreign investment in Indian carriers is being given a thrust
right now because most domestic airlines are bleeding and banks in India are
reluctant to fund most of them.
So, there are
only a few options left to keep them afloat.
Even as the
Government starts the process of implementing a change in policy, there has
been a steady stream of chief executive officers and owners of global airlines
visiting the Ministry of Civil Aviation.
In March this
year, the Chairman and Chief Executive, Emirates Airlines and Group, Sheikh
Ahmed bin Saeed Al-Maktoum, visited the Ministry of Civil Aviation. Emirates is
one of the most profitable airlines in the world.
Earlier this
month, it announced the 24th consecutive year of profit-making, posting a
profit of $629 million.
The CEO of a
European airline, along with the promoter of a private airline in India, also
called on Civil Aviation Ministry mandarins earlier this month.
Officials
pointed out that, as and when the change in policy is brought about, there will
be adequate checks and balances to ensure that investments from countries or
sources that are detrimental to India's security are blocked.
Strict
screening
Each proposal
by a foreign airline will have to be cleared by the inter-Ministerial Foreign
Investment
Promotion Board (FIPB). With the Home Ministry being a part of FIPB,
any proposal considered against
India's security interests will be blocked,
officials said.
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