DIPP proposes 26 % FDI in domestic airlines

The Industry Ministry has moved a draft Cabinet note on allowing 26 per cent FDI by foreign airlines in the domestic carriers. File photo  

The Department of Industrial Policy and Promotion (DIPP) on Tuesday moved a Cabinet note, proposing 26 per cent foreign direct investment (FDI) in domestic airlines, which are in crisis and need immediate infusion of funds.

The note is contrary to the proposed move by the Civil Aviation Ministry, which has stuck to 24 per cent FDI in domestic carriers. The move comes at a time when several domestic airlines, including Kingfisher, are in complete financial mess and struggling to maintain their day-to-day operations.

“Private airlines are in dire need of funds for their operations and service upgradation to compete with other global carriers. They need immediate infusion of funds,'' the note circulated has stated. The Cabinet note has been sent to various ministries for their inputs before being placed before the Union Cabinet.

“Investor with 26 per cent or more holding is considered strategic, as he can have a say in the policy decision of a corporate entity under the Indian company laws.

An investor with 26 per cent support can block a special resolution in the board policy change,'' the note states. At present, FDI in domestic passenger airlines is allowed up to 49 per cent by overseas entities, other than foreign airlines. Non-resident Indians (NRIs) can invest 100 per cent.

Kingfisher reported a net loss of Rs.468 crore, Jet Airlines Rs.713 crore and Spicejet Rs.240 crore for the second quarter of the current fiscal under the impact of rising AFT price and weakening rupee.

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Printable version | Apr 19, 2021 7:49:18 AM |

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