Aviation sector may gets lifeline; 26% FDI proposed

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Aviation sector may gets lifeline; 26% FDI proposed
With domestic airlines rippling into losses and in high need of cash, especially Kingfisher and state-owned Air India, the Department of Industrial Policy and Promotion (DIPP) under the commerce ministry has proposed for 26% foreign direct investment (FDI) in aviation sector.

“Private airlines in the country are in dire need of funds for their operations and service up gradation to compete with other global carriers,” the note circulated by the Department of Industrial Policy and Promotion (DIPP) said.

The Civil Aviation Ministry earlier proposed 24% but DIPP ended up its suggestion with 26% as it feels anything below 26% would not attract strategic investment from foreign airlines.

The ministry also suggests that it may even increase the present level to 49% in the aviation sector.

At present, the other foreign entities barring foreign airlines were allowed to pick up the stake up to 49% in domestic airlines.

With this move, the domestic cash-strapped airlines will get a chance to overcome their cash-crisis situation.

Read more about: aviation, fdi, airlines, investment, kingfisher
Story first published: Wednesday, November 23, 2011, 12:28 [IST]
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