Foreign airlines can own 49% stake in Indian carriers

Foreign airlines can now pick up 49% stake in India's domestic carriers, a step that is expected to give a boost to cash-strapped aviation industry.

The Cabinet Committee on Economic Affairs on Friday approved the proposal which would pave way for much-needed equity infusion into India's airlines passing through acute turbulence as most of them are in dire need of funds for operations.

"The cabinet today approved the proposal of allowing foreign airlines to pick upto 49% stakes in Indian carrier. Though FDI of upto 49%, 75% and 100% was there in aviation sector, foreign airlines were not allowed," Civil Aviation Minister Ajit Singh told reporters after the meeting.

Current FDI norms allow foreign investors, not related to airline business, to directly or indirectly own an equity stake of up to 49% in Indian carrier.

Allowing foreign airlines to pick up stakes in Indian carriers has been a long-pending demand of the aviation sector.

Most of the Indian carriers are suffering losses because of high taxes on jet fuel, rising airport fees, costlier loans, poor infrastructure and cut-throat competition.

Except IndiGo, all airlines have posted losses in the financial year ending on March 31.

Srivastava, whose cross examination would continue tomorrow, said, "whatever may be the hierarchical level of the PS, he exercises the powers of the minister and issues orders in his name."

He said that whenever a meeting was to be held in the room of the minister, the information would invariably come from Chandolia on phone.

He denied the suggestions of the defence counsel that he is deposing falsely against Chandolia under the "pressure of the CBI" as the agency had earlier searched his house and had seized the documents pertaining to his house building advance, income tax papers, LIC papers and others.

"It is wrong to suggest that I am deposing falsely against Chandolia under pressure of CBI as I have entered a deal with it for return of my documents for deposing against him.

"It is further wrong to suggest that the deal included the non-initiation of DA case against me. It is wrong to suggest that I am a stock witness of CBI and it is using me in several cases," Srivastava said.

He had earlier told the court that Chandolia had asked him to stop receiving new applications for 2G spectrum licences once the Unitech Group firms submit them.

He had said that on September 24, 2007, Chandolia had told him that Unitech Group firm's applications will be submitted to the department on that day itself.

Raja, Chandolia and DMK MP Kanimozhi, along with others, are facing trial for various offences like cheating, forgery, criminal conspiracy and faking documents under the IPC and for the offences of abusing official position, getting bribe and criminal misconduct by public servant under the Prevention of Corruption Act.

The offences entail punishment ranging from six months in jail to life imprisonment.