Govt may consider FDI in airlines next week

The cabinet deferred on Thursday a decision to allow foreign airlines to buy stake in local carriers and may take up the issue next week, Civil Aviation Minister Ajit Singh said.

A positive decision would have paved the way for a lifeline for struggling Kingfisher Airlines.

Shares in carriers reversed their early gains after the news. Kingfisher and Jet Airways fell by 4%, while SpiceJet dropped 5%.

India's airlines, facing a debt-load of $20 billion and losses of $2.5 billion, have been hurt by higher fuel costs and massive competition, and are looking for ways to bring in cash to run daily operations.

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49%.