Govt opens up sky to foreign players with 100% FDI in airlines

Overseas investors, barring foreign airlines, can now buy up to 100 per cent stake in Indian carriers under the relaxed FDI norms announced today which the government said will make flying more affordable.
The regulations pertaining to airports too have been eased by allowing 100 per cent foreign direct investment (FDI) in existing ones through the automatic route.
The latest round of reforms comes less than a week after the NDA government unveiled the national civil aviation policy that provides for various measures to boost the sector with a high growth potential.
Aviation experts said the relaxation of norms will help airlines bring in more cash from foreign players and expand their fleet.

Now, 100 per cent foreign investment will be allowed in "scheduled air transport service/domestic scheduled passenger airline and regional air transport service," an official release said.
Only non-airline players will be allowed to bring in 100 per cent FDI in local carriers.

The announcement also comes against the backdrop of persisting concerns over ownership and control at local carriers where foreign players have a substantial stake.
Under the revised policy framework, 49 per cent will be through the automatic route and for anything beyond, government nod will be required. At present, up to 49 per cent FDI is permitted in scheduled airlines.

"For NRIs, 100 per cent FDI will continue to be allowed under the automatic route," the release said.
Maintaining the status quo, foreign airlines will be allowed to invest only up to 49 per cent in Indian carriers.
"However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49 per cent of their paid-up capital and subject to the laid-down conditions in the existing policy," the release said.
Commerce and Industry Minister Nirmala Sitharaman said the revised FDI policy is "essentially to open up the Indian skies and make flying affordable" and expressed hope that there will be a "good positive investment response".

A level-playing field should be ensured and with the opening up of FDI, there will not be any monetary shortage for the aviation sector, she told reporters.