Govt says no to raising 49 pc FDI cap in aviation sector

Government today ruled out raising the 49 per cent FDI cap in the Indian aviation sector.
"I don't think so. Because the 1934 Civil Aviation Act says management has to be in Indian hands, majority of directors have to be Indian. Whatever worries people have, government will still decide the routes, government will still give at what time they fly and where," Civil Aviation Minister Ajit Singh told reporters while replying to a query.

"Now, they have all changed. See, it is a capital- intensive industry... Even working capital they are not getting. It is only if you allow them to, airlines to invest 49 per cent. FDI is already allowed. We are not asking anybody to take it. It is not compulsory. Those who do not want it, fine," he said when it was pointed out that some airlines favoured raising the 49 per cent FDI cap.

India allows FDI in domestic airlines up to 49 per cent but had been disallowing foreign airlines from investing in the sector. The government, however, is now planning to allow foreign airlines to pick up 49 per cent stake in their Indian counterparts.

The ruling coalition partners are also being brought on board on the issue of FDI in aviation, Singh said on the sidelines of a book release function