By M Saraswathi
NEW DELHI, India (NNN-Bernama) -- Foreign airline companies are now allowed to take up to 49 per cent stake in India’s scheduled and non-scheduled air transport services, a policy long overdue.
Ministry of Commerce and India in a release said removing the existing restriction on investment by foreign airlines would assist in bringing in strategic investors into the civil aviation sector.
"Higher foreign investment inflows are necessary at the present juncture, in order to strengthen the sector,” it said.
The move would help the ailing aviation sector in India.
According to the International Air Transport Association, Aviation in India supports 1.7 million jobs, 0.5 per cent of Gross Domestic Product (GDP) and responsible for 90 per cent of international tourist arrival.
However, the major carriers in the country have lost close to US$2 billion in the last fiscal year to March 2012, after losing US$3.5 billion over the previous three years and are carrying debts of US$20 billion.
Along with these, the Indian government also made other drastic changes in its Foreign Direct Investment (FDI) policy to revive its ailing economy and restore investors’ confidence in the country.
It has allowed 51 per cent FDI in multi-brand retail trading, but state governments are given the choice to take it up or otherwise.
A minimum investment of US$100 million has been set, half of which necessarily has to be in creating storage and warehousing facilities in rural areas, Ministry of Commerce and Industry said in a separate statement.
“Small manufacturers will benefit from the conditionality requiring at least 30 per cent procurement from Indian small industries, as this would enable them to get integrated with global retail chains,” said the ministry.
It said Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana and Manipur and the Union Territory of Daman & Diu and Dadra and Nagar Haveli, have expressed support for the policy in writing.
Jammu & Kashmir has publicly endorsed the policy and asked for its implementation. However, the state of Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Odisha have expressed reservations.
The government also raised FDI cap in broadcasting from 49 per cent to 74per cent and allowing foreign investment of up to 49 per cent power exchange.
In the same spirit, the government also approved divestment of stakes in four public sector units. -- NNN-BERNAMA
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