Foreign airlines allowed to invest up to 49 per cent in Indian carriers

The union cabinet, at its meeting chaired by Prime Minister Manmohan Singh today decided to allow foreign airlines to invest up to 49 per cent in the equity capital of Indian carriers.

''The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of the Department of Industrial Policy and Promotion for permitting foreign airlines to invest up to 49 per cent in the equity capital of scheduled and non-scheduled air transport services in India,'' an official release said today.

The decision will help bring in strategic investors into the civil aviation sector at a time when almost all domestic airlines are reporting operational losses.

Foreign investment inflows would also help the sector to introduce global best practices, leading to higher service standards, international best practices and induction of state-of-the-art technologies, the release said.

Until now, foreign airlines were allowed to participate in the equity of companies operating cargo airlines, helicopter and seaplane services, but were barred from investing in the equity of an air transport undertaking operating scheduled and non-scheduled air transport services.

The 49 per cent limit will include both FDI and investments by foreign institutional investors and would have to be in compliance with relevant regulations of SEBI, such as the Issue of Capital and Disclosure Requirements (ICDR) Regulations / Substantial Acquisition of Shares and Takeovers (SAST) Regulations, as well as other applicable rules and regulations, the release said.