Govt introduces 100 pct FDI in civil aviation

The extant FDI policy on Airports permits 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route, read the government statement.

With a view to aiding in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport projects.

As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and  non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.

Meanwhile, the aviation industry reacted to the development with the Etihad Airways saying that it is a committed, long-term partner and investor in India.

Etihad Airways Spokesperson said in a statement: "Etihad Airways is a committed, long-term partner and investor in India."

"In 2013, we became the first international airline to invest in an Indian carrier – Jet Airways – under the then Foreign Direct Investment (FDI) rules. We value our strategic partnership with Jet Airways and will carefully examine the Government of India’s decision made today on a revision of the FDI rules in the Civil Aviation Sector," the Spokesperson said.

Prem Bajaj, Chairman and Managing Director, Bhadra International (India) Pvt. Ltd. said,that “The new policy for ground handling clearly lays down level playing field amongst the authorized service providers in terms of the Royalty and has put a total stop on the hiring of manpower from the manpower suppliers at the security sensitive Indian Airports.  The government has allowed self-handling to the domestic carriers at all the airports only through their permanent employees or through the employees of their own subsidiary taken on regular employment and are on their own pay roll.  The government thus has taken a right decision in this regard keeping the charged security scenario."

Murali Ramachandran, CEO-India, Celebi Aviation said “The much awaited policy has been announced today and the MOCA has paid a lot of due attention to this part of civil aviation ecosystem and heard the voice of stakeholders carefully. Whether it helps in improving economies of flying is a moot point, since there was sufficient competition already existing in this sector. An important aspect of the policy is the single window system for all aviation related transactions and complaints by aviation regulator Directorate General of Civil Aviation or DGCA."

Rakesh Jain, President and CEO, Indo Thai Airport Management Services Pvt Ltd said “The NDA government for the first time is building an ecosystem that will lead to an increase in air travel by making it affordable with real time safety tracking. It is a very comprehensive attempt at policy making and reconciliation of an excellent vision with heavy detailing. The long wait was certainly worth its while. The ground handling part of the policy witnesses a lot of changes from the original draft and has become far more sector friendly. However, the process continues and requires further detailing and the crafting of appropriate rules and regulations and we hope that stake holders are involved with similar sincerity as was witnessed in the policy formulation stage.”