Airports modernisation takes off

Shubha Madhukar
03 July 2004

The EGoM approval to 74 per cent private equity for modernisation and restructuring assures world-class airports at Mumbai and Delhi

Praful Patel is a happy man. No sooner had he taken over the reins of the civil aviation ministry, he managed to leave behind the scalding privatisation issue caused by adverse statements from the left, which had caused major ripples even before the government was formed. Patel now breathes easy with the empowered group of ministers (EGoM), having approved the privatisation of the Mumbai and Delhi international airports. For the successful entrepreneur-turned-politician, it is a successful beginning to his ministerial assignment, too.

But Patel is not the only winner. In fact, with the simmering airport privatisation issue coming to a positive conclusion, you and me and all air travellers have won…for it trumpets better aviation days. Ideally, the government should focus on social sectors and only provide impetus to the development of basic infrastructure. It should let private organisations use their resources and expertise to provide world-class infrastructure.

The EGoM, under the chairmanship of defence minister Pranab Mukherjee has decided to allow 74 per cent private equity, with a cap of 49 per cent on foreign direct investment. The foreign investors will bring in their experience, managerial and technical expertise while Indian private investors would complement them to turn the two airports into world-class facilities with a lesser burden on the public exchequer — and faster.

According to the decision, two separate joint venture companies would be formed for the two international airports. The foreign firms will not be allowed to hold more than 49 per cent equity. Indian firms, including domestic financial institutions, would hold a 25 per cent stake in the firms while the Airports Authority of India (AAI) will hold the remaining 26 per cent. It has also been decided that over a period of time, 60 per cent of the existing employees would be deputed to the new joint venture while the remaining would be retained by the AAI.