Centre to take a call on airline FDI soon

Moving ahead with its proposal to provide relief to the cash-strapped aviation industry, the government, on Thursday, said it would ‘very soon' take a call on allowing foreign airlines to pick up stake in Indian carriers. “This has been discussed with the Finance Minister, the Civil Aviation Minister and myself and an appropriate view and decision will be taken very soon,” Commerce and Industry Minister Anand Sharma told reporters on the sidelines of the ‘Hero Mindmine Summit' here. In his budget speech, Finance Minister Pranab Mukherjee said a proposal to allow foreign airlines to participate up to 49 per cent in domestic carriers was under active consideration of the government. At present, FDI up to 49 per cent is permitted in the airline sector in India, but foreign carriers are not allowed to buy stake due to security reasons. The financially troubled civil aviation sector grew at 18.5 per cent in the last seven years and the government had taken various steps to resolve the woes faced by the airline industry, the Economic Survey for 2011—12 had said. Kingfisher Airlines has slipped into a crisis and has total debt of more than Rs.7,000 crore. Indian banks have no plans for another round of debt restructuring for the cash-strapped Kingfisher Airlines. Looking into the demands of the cash-strapped aviation industry, the government had, on January 17, decided to launch the process to allow foreign airlines 49 per cent stake in Indian carriers. This was decided at a meeting between Mr. Mukherjee and Civil Aviation Minister Ajit Singh. The Civil Aviation Ministry, thereafter, circulated a Cabinet note on the matter. Allowing foreign airlines to pick up stake in Indian carriers would mark a major policy shift. Meanwhile, Mr. Sharma exuded confidence that a consensus would soon emerge on opening multi-brand retail to foreign investors so that States, which were keen, could opt for it. Following widespread opposition, including from several States and its own allies, the government suspended its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail on November 24, 2011. “I hope that we will be able to create the desired consensus...There are States that want it. There are States that have reservations. Let us leave it to the States which want it and good luck to those who may not…consensus cannot be confused with unanimity, that will be a mistake,” Mr. Sharma said. The Department of Industrial Policy and Promotion (DIPP) has again started the consultation process with all the stakeholders, including farmers and consumer associations, to arrive at a broad consensus on the issue. “We are talking to everyone. We will have a stronger consensus,” he said. The Minister said the suspension of the decision was just a ‘pause'. On the New Manufacturing Policy, he said the policy would reduce delays in implementation of projects. “The policy is there. It effectively cuts red tape and delays. It has created a single window clearance mechanism. All the notifications have been aligned,” he added. Keywords: airline FDI, Economic Survey for 2011-12, Anand Sharma