June 23, 2016 TnH Global

India permits 100% foreign investment in airlines

The Indian government has announced that foreign investors can now take full ownership of local airlines, the Business Standard reports.

The limit of FDI in Indian carriers has been raised to 100% from the previous 49%, however the cap on investment by overseas airlines remains at 49%. In addition, overseas companies will now be able to invest 100% in “brownfield” airport projects in India.

The relaxation of FDI rules in 2012 saw Etihad, AirAsia and Singapore Airlines all invest in India. At present Etihad owns 24% of Jet Airways, while AirAsia and Singapore Airlines hold 49% stakes in AirAsia India and Vistara respectively.

The newspaper reported aviation experts as welcoming the policy, although they were cautiously optimistic. Some stated that the risks associated with the Indian aviation sector could deter investors.

“While the increase in FDI for aviation is welcome as it will allow flexibility, we are unlikely to see investors suddenly rushing to invest in airlines just because the cap of 49% has been removed,” Peeyush Naidu, partner at Deloitte India, told the Business Standard.

They also suggested that with non-airline investors being allowed to own 100% of Indian carriers, foreign airlines could form joint ventures to set up new airlines in the country.

News Source: http://www.traveldailymedia.com/ & Business Standard