The Hindu Business Line : Govt plans to allow PIO participation in aviation

IN what could be a major policy change in the domestic civil aviation sector, the Government proposes to allow participation of persons of Indian origin (PIO) in the sector through the FDI (foreign direct investment) route.

Official sources told Business Line that the Government, which is set to move ahead with the plan, is mulling amendments to the current regulatory framework to allow PIO participation in the sector.

The Ministry of Civil Aviation is understood to have circulated a draft Cabinet note that seeks to equate at par PIO investments with Non-Resident Indians for the purpose of FDI limits in the domestic aviation sector. Currently, NRIs are allowed 100 per cent FDI in domestic airlines.

However, the guidelines issued by the Ministry of Civil Aviation require them to be citizens of India. PIOs are second- or third-generation Indians holding foreign passports.

The Finance and Commerce Ministries are said to be favourably inclined towards the move to include PIO as NRIs.

The Minister for Civil Aviation, Mr Praful Patel, had said that the existing civil aviation requirements stipulate that scheduled or non-scheduled air transport operators permits can be granted only to Indian citizens or to a company or body corporate, provided substantial ownership and effective control remained with Indian nationals.

"Hence, PIOs, who are not Indian citizens, cannot be permitted to operate air transport services in terms of the current regulatory position," he added. The Government, however, has no intention of allowing foreign airlines to invest either directly or indirectly in the domestic sector just yet.

This, despite the Planning Commission's Mid-Term Review of the Tenth Plan making a case for a review of the policy debarring equity participation in domestic air transport operations by foreign airlines.

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