Kingfisher, SpiceJet major beneficiaries of FDI in aviation: Experts
Overriding the opposition of its ally Trinamool Congress, the Cabinet Committee on Economic Affairs on Friday relaxed norms for foreign direct investment in the aviation sector, allowing international airlines to invest in domestic peers.
Here is what experts have to say.
Mr Chandrajit Banerjee, Director General, CII
“Coming a day after the fuel price announcements, the decision of the Government to ease FDI norms in an array of sectors like Multi Brand Retail, Civil Aviation, Power Trading Exchanges and Broadcasting is a tremendous boost not only to the sectors in question, but is a huge mood lifter.
“The despondency that had set in owing to absence of policy announcements would certainly be addressed to some extent. Global and domestic perceptions would also change and CII is hopeful that the rating agencies would take due note of these announcements as well.”
“The move to increase FDI caps in in these sectorsm will help mobilise capital into these sectors, which the country needs and would also improve the current account deficit situation, which was becoming alarming. Purely, from a policy point of view as well, yesterday’s announcements followed by today’s are an indication that reforms are back."
Captain G.R. Gopinath, founder of Deccan 360
“The orders issued is very good for the sector and, importantly, for the common man. As long as it’s an Indian-owned company, it is a good move… hope there is no retraction in the policy.
“…Very good news. It is very clear that equity investors would have been fairly unforgiving had this not passed through. So the reform policy was needed.
For aviation, Kingfisher is one of the clear beneficiaries. SpiceJet will also be able to benefit from this move to attract investment. For retail, it is clearly a shot in the arm… it will possibly change the face of retail in India."
Amber Dubey, Partner and Head of Aviation Practice, KPMG
"Allowing 49 percent stake to foreign airlines will create access to capital, global connectivity, technology and best practices. This could lead to establishment of new airlines in India and perhaps, change in ownership structure of certain Indian carriers. All this augurs well for Indian passengers. Increased competition would lead to better offerings, greater efficiency, cheaper airfares and more power to the passenger.
"Concerns have been raised about price undercutting by global carriers, losses to Indian carriers and threat to national security. Most of these appear a bit stretched. FDI has been allowed in more sensitive sectors like defense, telecom, media and banking. Nowhere has FDI led to wiping out of Indian companies. In fact Indian companies have only emerged better and smarter. MoCA, DGCA and CCI would be keeping an eye out for predatory undercutting of airfares. The proposed guidelines talk of the chairman and two-third of the board members to be Indian nationals. All foreign board members and global equipment will require security clearance. Thus most of the fears appear to be bit overstated.
"It would also pave the way for Indian carriers to buy stake in global carriers some day. Sounds unimaginable today. Just like no one imagined that iconic brands like Arcelor, Novelis, Tetley, Blackburn Rovers or Jaguar-Land Rover could be owned by Indians someday."
Adi Godrej, President of CII
"Allowing Foreign Airlines to invest in civil aviation will bring in much needed capital into the Airlines industry thereby enabling healthy re-capitalization of airline companies, promoting vital connectivity and bringing benefits to all stakeholders including banks.
"The move to enhance FDI caps will help increase capital flows which in turn should improve the current account deficit situation."
Kingfisher Airlines
"We are very pleased that the Government has decided to allow foreign Airlines to invest upto 49% in the equity of Indian scheduled Airlines. This will open up a wide range of opportunities for both Indian carriers and foreign carriers who wish to participate in the strong growth potential for Civil Aviation in our Country.
Kingfisher will now be able to re-engage with prospective Airline investors in a more meaningful manner and move towards re-capitalization and ramp up of operations."
Anand Mahindra, Chairman and Managing Director of Mahindra & Mahindra
From a Famine of policy action, we've moved to a feast. The Government's got back its gumption! We cheer & urge that they stay the course..