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Govt may review bar on foreign airline investment
By siliconindia staff writer
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Tuesday, 02 November 2004, 20:30 IST
NEW DELHI: India's policy of barring foreign airlines from buying stakes in local carriers is not permanent and could be reviewed in a year or two after domestic carriers are strengthened, Civial Aviation Minister Praful Patel said on Tuesday.
Patel told a news conference his ministry's priority was to strengthen India's state and private carriers by boosting their fleet and allowing them greater operating freedom and the entry of foreign airlines into the local market could wait.
Last month, the Government raised the foreign equity cap in domestic airlines to 49 per cent from 40 per cent in a bit to boost investment in a key industry, but continued to bar foreign carriers from picking up stakes.
The bar blunted possible global interest in a market that is expected to expand nearly nine per cent a year for the next 20 years, helped by rapidly rising incomes. India is one of the world's fastest growing economies and Asia's fourth largest.
"This is not sacrosanct (policy). This may be reviewed in a year or two, this is an ongoing process. Let Indian airlines fly to other countries, let Indian Airlines and Air-India be strengthened first," Patel told a news conference.
Indian airlines may not be able to compete if foreign carriers are immediately allowed into the country, he added.
Foreign individuals and institutions, but not foreign airlines, can currently hold stakes in Indian airline companies. Non-resident Indians and foreign firms in which they hold at least 60 per cent stakes, can hold 100 per cent of local airlines.