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Will foreign airlines be allowed to own upto 49% of Indian carriers?
What the government is now considering, would allow an airline like Virgin, for example, to own upto 49 per cent in a local carrier like Kingfisher - an earlier proposal suggested a cap on FDI at 26 per cent for foreign airlines.
17 Jan 2012, 06:54 PM IST 
In an attempt to bail out bleeding airlines, the government is considering whether to allow foreign airlines to own upto 49 per cent of Indian carriers.
Currently, foreign investors can own upto 49 per cent stake in Indian airlines, but only if they are not in the airline business abroad. What the government is now considering would allow an airline like Virgin, for example, to own upto 49 per cent in a local carrier like Kingfisher - an earlier proposal suggested a cap on FDI at 26 per cent for foreign airlines.
The Commerce Ministry and the Civil Aviation Ministry have been working on this new proposal and today, the relevant Group of Ministers has agreed in principle to this proposal. It will now have to be discussed and reviewed by the cabinet. Civil Aviation Minister Ajit Singh said it would be upto each airline to decide if they want to allow FDI.
Recently, airlines like Kingfisher which are trapped in a cash-crunch and mega-losses have been petitioning for foreign airlines as partners.
Meanwhile, just days after nearly 40 pilots of the cash-strapped national carrier Air India went on an agitation over pending incentives, the Civil Aviation Minister has also said the government will be immediately releasingRs 150 crore to pay productivity-linked incentives. The government will also release an additionalRs 450 crore as a loan to the airlines.
This came after Mr Singh met Finance Minister Pranab Mukherjee on Tuesday to discuss the financial stress of the airline sector and seek policy action to help carriers survive.
The Civil Aviation Minister also said a Group of Ministers will consider a restructuring plan for the airline. The debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 is vendor dues and an accumulated loss of Rs 20,320 crore, according to official figures.
The meeting comes less than a week after the Central Board of Excise and Customs froze Air India's 11 bank accounts for non-payment of duties worth an estimated Rs 300 crore.
