The Cabinet may consider relaxing the norms on foreign direct investment in aviation on Friday. The proposal of 49% FDI is there in the agenda for Cabinet tomorrow amidst the differences among the allies over it, especially Trinamool Congress.
The current FDI norms allow any entity other than foreign airlines (directly or indirectly) to take equity stake of up to 49% in domestic scheduled airlines. This move will allow foreign airlines also to pick up stake in the domestic Indian carriers. Such a move is expected to bring much-needed respite to loss-making airlines such as Kingfisher.
After around 5 quarters or so, four out of six aviation companies showed profits. That also is because of the shrinking of Kingfisher, the airlines were able to do away with below- cost ticket selling. With around 40% fare hike, the airlines were able to show profits in the first quarter of 2012-13.
The FDI in aviation is expected to bring more efficiency in the Indian aviation sector.
The current FDI norms allow any entity other than foreign airlines (directly or indirectly) to take equity stake of up to 49% in domestic scheduled airlines. This move will allow foreign airlines also to pick up stake in the domestic Indian carriers. Such a move is expected to bring much-needed respite to loss-making airlines such as Kingfisher.
After around 5 quarters or so, four out of six aviation companies showed profits. That also is because of the shrinking of Kingfisher, the airlines were able to do away with below- cost ticket selling. With around 40% fare hike, the airlines were able to show profits in the first quarter of 2012-13.
The FDI in aviation is expected to bring more efficiency in the Indian aviation sector.
In IATA conference in Beijing, the industry also expressed its concerns over 49% FDI. The major concerns were if they would be able to exercise free will without any government interference with 49% stake.
However, Ajit singh ,civil aviation minister, expressed hope that FDI will benefit Indian aviation despite the financial stress the sector is in. In the interview with Business Standard, Singh said, "We are definitely in financial stress. But FDI would be coming for other reasons - the growth we have, the potential we have, a growing middle class, traffic rights and the strategic geographical position. It is basically an enabling legislation and it is up to the airlines."
http://www.sify.com/finance/49-fdi-in-aviation-in-agenda-for-cabinet-tomorrow-news-airlines-mjnpa7iajbh.htmlHowever, Ajit singh ,civil aviation minister, expressed hope that FDI will benefit Indian aviation despite the financial stress the sector is in. In the interview with Business Standard, Singh said, "We are definitely in financial stress. But FDI would be coming for other reasons - the growth we have, the potential we have, a growing middle class, traffic rights and the strategic geographical position. It is basically an enabling legislation and it is up to the airlines."
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