Financial Daily from THE HINDU group of publications
Saturday, Jun 05, 2004
Foreign Direct Investment
Logistics - Airlines
Ministry unlikely to roll back FDI cap on airports revamp
New Delhi , June 4
THE Ministry of Civil Aviation is unlikely to roll back its decision of capping the foreign direct investment (FDI) at 49 per cent for modernisation and restructuring of the airports at Delhi and Mumbai.
Official sources told Business Line that the Ministry's decision to lower the FDI cap to 49 per cent from 74 per cent was well within the guidelines laid down by the empowered Group of Ministers (GoM) which had initiated the restructuring and modernisation process of the two metro airports.
Sources indicated that while the GoM had fixed the upper limit for the FDI cap at 74 per cent, it had left it to the Ministry of Civil Aviation to decide at what level the FDI cap should actually be fixed.
Ministry officials said that the latest move was in keeping with what is said in the `Common Minimum Programme' (CMP) of the United Progressive Alliance (UPA).
"The CMP talks about bringing about greater public-private partnership which will be further enhanced by the latest move of the Ministry," official sources said.
On Wednesday, the Civil Aviation Minister, Mr Praful Patel, had announced that the FDI cap for the airport projects at Delhi and Mumbai had been fixed at 49 per cent. While there is a feeling in certain quarters of the Government that the Ministry will have to seek a nod of the Cabinet before the lowering of the FDI cap can be allowed, Ministry officials feel that this may not be necessary.
"It is unlikely that the Cabinet will have to involved as it is a procedural issue," officials said and added that several key Ministries, including the Prime Minister's Office (PMO), were being kept abreast of the developments.
Sources said that the urgency of announcing the reversal of the FDI cap was prompted by the fact that the last date for submission of Expression of Interest (EoI) for the two airports projects was approaching a few days after the new Government assumed office. "If the decision had been announced after the date for receiving the EoI had passed what would have been the validity of them. We had no option but to act fast," sources said.
While refusing to be drawn into the controversy surrounding the FDI cap in the restructuring and modernisation of the two metro airports, Mr Patel, merely said that all efforts would be made to ensure that the workers were protected.
"We respect and will address the sentiments of the Left parties and workers. We are taking steps to ensure the better financial health of Delhi and Mumbai airports and the future of the workers," Mr Patel said.
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