Even the Home Ministry has some reservation from security angle
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New Delhi, May 3:
The Government is
unlikely to take a decision on allowing foreign airlines to pick a maximum of
49 per cent equity in domestic airlines, at least till the Budget session is
over. The Budget session of Parliament gets over on May 22.
The market appeared to
have got wind of this on Thursday, as all the three listed scheduled airlines,
Jet Airways, Kingfisher and SpiceJet, got a hammering. In fact, Kingfisher's
stock once again breached the psychological benchmark of Rs 15 and closed below
it.
A Government source
said: “There is no political consensus yet. Efforts are on.”
Meanwhile, the Civil
Aviation Minister, Mr Ajit Singh, informed the Lok Sabha in a written reply,
“The proposal to allow investment by foreign airlines in the domestic carriers
is under examination of the Department of Industrial Policy and Promotion.”
A detterent
The existing policy
allows foreign direct investment up to 49 per cent in scheduled domestic
airlines. However, the rider is that only those foreign companies with no
direct or indirect relations with aviation business are eligible to make
investment. Experts feel this has deterred many potential investors from coming
into India.
Though in February, a
Group of Ministers recommended the relaxation of norms followed by circulation
of the draft Cabinet note. The matter is yet to reach its logical conclusion.
It is believed that not only key ally Trinamool Congress is against the move,
but even the Home Ministry has some reservations from the security point of
view.
It is also believed
that the Home Ministry has specific concerns about investments from certain
parts of the globe, including the Gulf region. However, the Civil Aviation
Minister, Mr Ajit Singh, had said that once the policy is approved, every FDI
proposal will go through approval route. It means Foreign Investment Promotion
Board will examine proposals on a case to case basis after obtaining views from
various ministries.
Fails to pacify
It has also been said
that for foreign airlines picking up equity up to 49 per cent, it will be
mandatory to have two or three Indians on the board as directors. This will
ensure that control will remain with Indian hands. However, even these
safeguards have failed to pacify those opposed to the move.
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