India cuts foreign investment limit in airport privatization
Thursday, 03 June 2004, 19:30 IST
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NEW DELHI: The Indian government Wednesday reduced the equity limit that overseas investors can hold in the proposed privatisation of the country's two biggest airports. Foreign investors will be allowed to pick up a maximum stake of 49 percent in the private companies that will manage the New Delhi and Mumbai airports, Civil Aviation Minister Praful Patel told a news conference here. Under the airport privatisation plan approved last year by the previous Bharatiya Janata Party-led coalition government, foreign companies were allowed to pick up as much as 74 percent equity in the venture. According to the revised plan, foreign investors will now be allowed to hold up to 49 percent stake, state-run Airports Authority of India 26 percent and the remaining 25 percent will go to Indian companies or financial institutions. "Our government has decided that a minimum 51 percent stake should remain in Indian hands. If any Indian company or financial institution wants to go all the way to 74 percent, we will be happy," said Patel. "In India, there are many companies capable of investing large sums of money. They are now in a position to make available a large amount of funds for infrastructure projects," he noted. Industry welcomed the move, saying Indian companies would get ample opportunities to firm up joint ventures, invest and participate in airport development. "Financial institutions are flush with funds and would be able to play a major role in airport development and thereby play a vital role in a major sector of infrastructure development," said the Confederation of Indian Industry. "Airport development, up-gradation and modernisation has been high on the agenda for a long time and the delay was costing heavily to the country, to the exchequer, to investors and to customers and travellers," it noted. The industry lobby group said the cap for equity participation at 49 percent would bring in state of the art technology, apart from resources from investors to modernise and upgrade the two major airports. Asked whether the lowering of the foreign investment limit would discourage overseas investors, Patel said: "The policy of 49 percent is followed in many countries across the world. "When there is Indian equity available in the country why shouldn't I give them the opportunity to participate in the process?" Patel said the privatisation of New Delhi and Mumbai airports, the country's two most profitable airports, would be completed by the end of the current calendar year. The last date for submission of expressions of interest by private companies has been extended from June 4 to July 20. On protests by the airport workers' union against the privatisation process, Patel said the government would ensure that the sell-off process would not affect the interest of the employees. "We will talk to them and make sure there is no disruption of the process. I will ensure that no worker is retrenched due to the privatisation of airports," he said.
Source: IANS
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