Government mulls to remove anomaly restricting FDI in civil aviation

The government is considering to remove an anomaly restricting foreign direct investment (FDI) in the civil aviation sector to attract more overseas funds.

The sector is faced with an odd situation wherein a foreign investor, excluding overseas airlines, can acquire up to 100 % stake in a local carrier but not seek a scheduled operator's permit. The permit can only be given to a company which has substantial ownership and effective control in the hands of Indian nationals. "As this condition restricts and prevents foreign investors to take 100% stake in a domestic airline, there is a need to amend this rule in order to facilitate FDI in the sector," sources said. They added that due to this anomaly, the moment foreign investors buy 51 % or controlling stake in a domestic airline, the schedule air operator permit gets withdrawn.

"So this sectoral norm needs to be amended," they said. The move is a part of the overall exercise of the commerce and industry ministry which is planning to remove all bottlenecks to facilitate FDI In the country. DIPP Secretary Ramesh Abhishek has recently said that the government is trying to address specific policy issues in various sectors. FDI in 2015-16 grew 29 % to $40 billion (around Rs 2.67 lakh crore).