Aviation ministry clears 26 per cent FDI in airlines: report

10 Dec 2011

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New Delhi: The ministry for civil aviation may have finally seen reason and cleared a draft proposal that would allow foreign airlines to pick up 26 per cent stake in Indian carriers, reports emanating from the capital suggest. So far, the ministry had dug in its heels on the issue and refused to consider offering a stake of more than 24 per cent to foreign carriers.

A 26 per cent stake will allow an investor the right to block special resolutions on the board and have a greater say in business decisions.

According to government sources, the civil aviation ministry has sent its response to a draft Cabinet note to the Department of Industrial Policy and Promotion (DIPP) on December 7, which likely contains its approval to the proposal.

DIPP had proposed 26 per cent FDI in airlines for foreign investors but failed to muster support from the civil aviation ministry though it received backing from the ministry of finance.

DIPP operates under the commerce and industry ministry.

26 per cent FDI in airlines has also received clearance the ministry for home affairs besides the Planning Commission.

The issue is now likely to be brought before the Cabinet for formal approval and implementation.

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