Ministries consider draft cabinet note for FDI in aviation

New Delhi: With the domestic aviation sector in turmoil, particularly with struggling state-owned Air India and private carrier Kingfisher Airlines all set to go under without further infusion of funds, it is now being given to understand that the ministry for civil aviation has sent a draft cabinet note asking FDI be allowed in airlines.

As the nodal ministry, the ministry for civil aviation has recommended 24% FDI for domestic carriers. However the finance ministry is recommending 26% and reports suggest that it may even recommend that this level be allowed to be increased to 49% in the aviation sector.

The ministry of commerce and industry's Department of Industrial Policy and Promotion (DIPP) had in the past circulated a cabinet note on FDI in aviation recommending 26% FDI in aviation.

DIPP's rationale for the 26% stake is that it will allow a foreign airline to put members on the board and also block any special resolutions which will not be the case in 24%.

The finance ministry is yet to make their stand clear on this matter.

It is being given to understand that what is being currently contemplated is permission to own 49% stake, as that is the current cap on FDI. There is no significant difference between 26% and 49%, as an airline will remain Indian owned and controlled even at the enhanced level.

According to government sources, various ministries are considering ministry of civil aviation's cabinet note on FDI and are likely to take final decisions over the next one week.