India's cash strapped aviation industry is likely to get a new lease of subsistence as the Civil Aviation and Union Finance ministers in their meeting agreed upon permitting foreign carriers to buy stakes in Indian airline up to 49 percent. The proposal to allow foreign airlines, which are at presently barred from owning stakes in domestic carriers, to infuse 49 percent foreign direct investment (FDI) in Indian carriers will soon be presented before the Union Cabinet for approval.
The development has emerged after months of lobbying by loss making airlines like Kingfisher Airlines and GoAir and also after Prime Minister Manmohan Singh assured the country will find ways and means to help domestic airlines. 49 percent FDI already exists in the Indian aviation sector, but only from financial and other non-airline investors from abroad. Once the move materializes, it would enable the much needed cash injections for the distressed Aviation sector which have been struggling in the extremely competitive market and help it tide over the current financial crisis.
Meanwhile, the ministers also agreed upon to provide Air India with Rs 150 crore for payment of portion of pending salaries and allowances of employees, including pilots. Aviation minister is of the belief that the amount released would be sufficient to pay at least some part of their wages and PLI (productivity-linked incentives). A decision on the airline's loan restructuring and the proposal to allow local airlines to import ATF is also expected in the next meeting of the group of ministers.
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