No need to restrict FDI in aviation sector: DIPP Secretary

Mehak Kasbekar Updated - January 20, 2018 at 09:04 PM.

RAMESH ABHISHEK DIPP Secretary

DIPP Secretary Ramesh Abhishek asserts that the cap for foreign airlines to invest in Indian aviation will stay at 49 per cent. In an exclusive interview with Bloomberg TV India , he says the government will continue on its path to further open up the economy to facilitate ease of doing business.

You have allowed up to 100 per cent FDI in aviation. How will this help the aviation sector to grow?

Civil aviation is a fast-growing sector. Perhaps, India has the fastest-growing civil aviation sector in the world. And the potential for increase of the sector in terms of the passengers being carried is enormous.

And we felt that there is no reason not to allow 100 per cent FDI in this sector if it leads to its development. There will be more infusion of capital, which may help in extending more routes and adding to the capacities, whether it is airports or airlines.

I think we have provided a helping hand to get access to more capital to the sector.We need top-class infrastructure if we want to grow the economy to a double-digit level. So there is no need to restrict FDI in the aviation sector.

There is a little bit of a restriction here. Foreign airlines can invest only up to 49 per cent in scheduled carriers in India. Tell us the rationale behind retaining that clause?

The 49 per cent cap was already there. But the important thing is it was always 100 per cent for NRIs. And now this has been made 100 per cent for all investors, all foreign investors other than foreign airlines. And this will open up huge possibilities of investment in the sector.

Under the defence FDI policy, the clause on access to state-of-the-art technology in the country has been done away with. Is this really a small tweak?

The overall FDI policy in defence remains the same. It was 49 per cent under the automatic route and under the approval route it was up to 100 per cent. That overall policy remains the same.

We have done a minor fine-tuning of the conditions. It was earlier said that it should allow access to modern or state-of-the-art and cutting-edge technology. So we have now dispensed with the state-of-the art requirement and added that it could also be for other reasons. I think the idea was to simplify and facilitate investments in this sector. We have noticed that not much investment has come so far.

The policy was not made very long back. And manufacturing in an area such as defence takes time. But we don’t want to restrict the investors. I think we would like more investment here. And if somebody wants to come with less than state-of-the art facility, then it is for them to decide.

Ultimately, it is for the buyer to buy whatever they want as per their specifications and as per the prices offered.

So I think it is the investor which is taking the risk, and not the government.

Published on June 22, 2016 16:44