Government weighing higher FDI in aviation: Praful Patel

14 Jan 2009

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The government is considering a proposal to allow foreign airlines pick up stake in domestic carriers among other measures to help the Indian aviation industry overcome the financial crunch.

Foreign investment in the country's aviation sector is currently limited to 49 per cent equity stake.

''There are various options before the government as to how to support the  industry,'' civil aviation minister Praful Patel said.

"May be the time has now come to explore whether foreign airlines can be permitted to invest part of that 49 per cent in the domestic sector," he added.

He, however, said it is still in the preliminary stages of evaluation and "no formal decision has been taken, nor any note moved" on the issue.

He said the options are being considered as the "financial markets do not seem to support" the cash-strapped industry at the moment.

Official sources have said the government was considering an extra 20-25 per cent foreign equity in Indian carriers.

The proposal has strong backing from Kingfisher Airlines promoter Vijay Mallya and British carrier Virgin Atlantic Airways although some domestic carriers still oppose a higher stake for foreign investors.

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