The Hindu Business Line : FDI in aviation sector

The Minister for Civil Aviation, Mr Praful Patel, calling on the Minister of Commerce & Industry, Mr Kamal Nath, in the Capital on Tuesday. — Kamal Narang

New Delhi , June 8

THE Government plans to hold consultations with investors before taking a final decision on whether to allow foreign direct investment (FDI) into the domestic aviation sector.

In an informal chat with select newspersons here on Tuesday, the Minister for Commerce and Industry, Mr Kamal Nath, said that the Government was not against foreign investment in the aviation sector.

``But the question is, what is best, looking at it from the need of the airline. We want to test the waters and, therefore, there will be consultations with investors before the policy is announced,'' Mr Kamal Nath said.

On the issue of whether foreign airlines will be allowed to acquire a stake in domestic airlines, the Minister felt that the foreign airlines must come in with some amount of "incrementality" and added that it was necessary to see whether the airline was an "investor or more and whether that more is something that is necessary."

The Minister said that there was a need to guard against foreign airline investors which were interested in only taking away traffic from India. Mr Kamal Nath was speaking to the media after an hour-long meeting with the Minister of Civil Aviation, Mr Praful Patel, on issues connected with the yet-to-be-announced civil aviation policy.

On the issue of the two airline acquiring aircraft, Mr Kamal Nath felt that India, like various countries around the globe, needed to "leverage on trade issues" where such sales were concerned. While being categorical that he was not pitching for either the American aircraft manufacturer, Boeing, or the European consortium, Airbus, the Minister added that "the new school of thought has to be trade driven".

Mr Kamal Nath felt that there was a need to follow a policy which would make it easier for foreigners to visit India. "We need to see how we can facilitate more flights, consumers, tourists and trade," he said.

The country, he said, would soon have a civil aviation policy that is "consumer-oriented and liberal." When asked if any differences existed between the Ministries of Civil Aviation and Commerce on FDI in the aviation sector, he said ``there is none at all. There is nothing wrong if the FDI has been capped at 49 per cent. If someone builds a greenfield airport with 100 per cent FDI, we don't have problems at all. We also do not have problems if someone comes at below the cap of 49 per cent, they can even come at 25 per cent,'' Mr Kamal Nath said.

On the issue of private sector airlines being allowed to fly to more foreign destinations, he said ``the private players have played a major role in the aviation sector and they have done well. We would allow them to consolidate their economies of scale first before allowing them to operate to other foreign destinations''.

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