As an attempt to garner more foreign capital into India’s ailing aviation sector, the Ministry of Civil Aviation is planning to overarch a new law as to ease foreign airlines equity participation in domestic aviation, while protecting interests of passengers and ensuring safety.
As India being the world's ninth biggest civil aviation market, it expects to cater about 180 million passengers by 2015. The New Civil Aviation Act of 2012 will replace the Aircraft Act of 1934, which does not cover critical issues like viability and security, and has been severely criticized in safety audits conducted by global aviation bodies. The current governing law focuses primarily on aircraft manufacturing and operations, while the new law is expected to comply with international best practices in sync with the times and attract investors to a market, which expects an annual growth of 20%.
The Aviation ministry has proposed Department of Industrial Policy and Promotion (DIPP) to allow foreign airlines participation up to 24% in local carriers within the existing cap of 49% for foreign investors, despite of strong opposition from private carriers like Jet Airways and Spice Jet. The government emphasized the importance of compliance of new law with international best practices, in hopes that it can attract the best global aviation leaders to Indian market.
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