The union home ministry wants the management control of all domestic airlines to be "retained by the government or in Indian hands". In a note to the group of ministers, which is scrutinising the new civil aviation policy, the ministry said that while it had no objections to the level of the FDI ceilings, management control should be retained with local entities or the government.
The home ministry note has also opposed private ground handling companies, because of security reasons.
Even with a 49 per cent stake, a foreign investor could be the largest shareholder, giving it control. The finance ministry wants to allow foreign airlines a 26 per cent stake within the 49 per cent FDI cap in domestic carriers, but the civil aviation ministry is against this, as it will allow foreign carriers to use domestic airlines as feeders for international operations. This, it says, will harm the prospects of the state-run Air India.