Even as the Government is working on allowing foreign airlines to pick up equity in domestic carriers, the proposal seems to have found no takers from Gulf carriers.
Gulf carriers such as Emirates have widely been perceived as being keen on buying equity in domestic Indian carriers.
A person familiar with the development told
Carriers are from the western and eastern countries but not a single Gulf carrier has made an enquiry.”
He refused to divulge names of the carriers shown interest in the proposal. The Department of Industrial Policy and Promotions (DIPP) has floated a note allowing foreign airlines to buy up to 26 per cent equity in domestic airlines.
Currently, barring foreign airlines (direct or indirect), foreign investors can invest up to 49 per cent in any scheduled domestic airlines. Scheduled domestic airlines are defined as any carrier which operates with minimum of five aircraft and a fixed schedule.
Takeover Code
He said that inter-Ministerial discussion on the proposal of FDI liberalisation is over. Even the market regulator, Securities Exchange Board of India (SEBI), has been consulted to see that the proposed regulations do not come in conflict with the Takeover Code.
The regulator is believed to have given its go ahead.
Under SEBI's Takeover Code, an open offer is triggered once an investor acquires 26 per cent stake in a listed company.
The size of the open offer required is 25 per cent, which would mean that the investor would have had to buy additional equity from the public.
Now, the FDI cap will be treated as sub-limit would be 26 per cent, so the open offer will not be required.
The issue came in question as three of the domestic scheduled airlines, Jet, Kingfisher and Spicejet are listed. All these companies are in red.
However, Jet is not in favour of foreign airlines' equity.
He also said that all the Ministries have favoured the 26 per cent limit, though there is also a suggestion for hiking it further.
Now the final call is to be taken by the Cabinet. It is expected that the matter will be placed before the Cabinet next month.
Earlier, the Civil Aviation Ministry was favouring a 24 per cent limit, which would have blocked veto rights for the foreign investor.
Now it has also given its support for the 26 per cent cap.
The Finance Ministry, the Home Ministry and the Planning Commission have already given their views in favour of the move, sources added.