karatecatman wrote:

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However, foreign airlines looking to invest in India’s aviation sector still have to wait — the ban on their investing in domestic carriers will continue.  

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Wh would be Interested But Airlines

regds

MEL

http://economictimes.indiatimes.com/articleshow/644640.cms
FDI may fly up to 74% in airline sub-sectors
SUNNY VERMA

TIMES NEWS NETWORK[ THURSDAY, NOVEMBER 30, 2006 02:29:33 AM]
 
NEW DELHI: THE government is planning to raise the foreign direct investment (FDI) limit to 74% for non-scheduled airline operations, helicopter services and regional airlines using small aircraft. The current FDI ceiling for airline services is 49%.

The proposal for hike in FDI limit in these sub-sectors, mooted by civil aviation minister Praful Patel, is to catalyse growth in these key areas, a government official said. However, FDI in domestic airlines will be retained at the existing level of 49%. The move involves ushering in a different FDI ceiling for these sub-sectors while retaining the limit for the chunk of domestic scheduled operators at the current level.

While Indian aviation is growing at an impressive double-digit pace, the benefit is flowing mostly to high-density metro routes which have been the focus for all major airlines. However, non-metro routes, which can be profitably served by smaller airlines and helicopters, has not shown similar growth. Hence the plan to increase FDI limit as a booster dose for these lagging areas which need more connectivity.

“Allowing greater FDI in smaller airlines and helicopter firms will boost traffic in under-served areas and enhance overall growth of the aviation sector,” a senior civil aviation ministry official told ET. Industry experts said the increase in FDI cap may spur growth in the feeder airline business, a segment which has not kicked off in India so far.

“Hike in FDI in non-scheduled operations and helicopter services will give a fillip to the aviation industry,” said Kapil Kaul, CEO of Centre for Asia Pacific Aviation (CAPA) for Indian sub-continent and the Middle East. Civil aviation minister Praful Patel had said recently that there was a need to open up areas like non-scheduled operations (charter flights), cargo and helicopters services. Both domestic and foreign private investment is crucial for development of aviation sector which is estimated to require Rs 40,000-crore in the medium term to sustain high growth. FDI, both at airports and in airlines, is considered important for government to achieve its long-term plan of creating an aviation grid across the country by developing 400 airports and airstrips.

Already, 100% FDI is allowed in airports through automatic route. Several foreign funds have recently expressed interest in taking an exposure to the growing Indian aviation market. The proposed hike in FDI in non-scheduled operations, helicopter services and regional airlines may enable them to hold majority stake in these areas. The proposed will, however, come with a rider. Though FDI in Indian carriers is allowed, no foreign airline firms can have a direct or indirect a stake in domestic Indian carriers. Even foreign equity funds, in which airline firms have a stake, are barred from investing in Indian carriers.