India: Allow FDI in Domestic Airlines - ASSOCHAM to Government

NEW DELHI (NNN-PTI): Industry body ASSOCHAM has suggested that the government allow foreign players to pick up a stake in domestic carriers in order to revive the cash-starved Indian aviation industry.

In the last three years, the civil aviation industry has suffered losses of Rs 20,000 crore, the chamber said.

"The industry can again fly on a growth curve in 2012 if the government lowers taxes on jet fuel, upgrades airport infrastructure and allows three major airlines -- Jet Airways, Kingfisher Airlines and SpiceJet -- to offload 49 per cent of the promoters' stake to foreign airlines for raising Rs 2,550 crore," it said.

The Industry Ministry has floated a draft Cabinet note proposing to allow foreign carriers to buy a 26 per cent stake in Indian private airlines.

ASSOCHAM has suggested "opening foreign direct investments by international airlines to bring in capital and technological expertise, allowing easier access to global routes by Indian carriers for increasing their yields (and) enhancing air traffic management infrastructure".

In the wake of a significant jump in passenger traffic, there is a need for huge investment in construction of new airports, besides expansion and modernisation of existing ones.

"Allowing FDI by foreign airlines and allowing more Indian carriers to fly overseas by utilising the full quota of bilateral agreements could be a key enabler to fuel further growth," it added.

At the same time, the government must rationalise ATF prices in tune with international benchmarks through policy changes, it said adding airlines are expected to add 370 aircraft worth Rs 1.5 lakh crore by 2016-17. -NNN-PTI