Date:03/11/2004 URL: http://www.thehindubusinessline.com/2004/11/03/stories/2004110302950400.htm

Back Foreign airline stake in domestic carriers at a `later date'

Our Bureau

Mr Naresh Chandra (left) submitting the second report on civil aviation to the Minister for Civil Aviation, Mr Praful Patel, in the Capital on Tuesday. - Kamal Narang

New Delhi , Nov. 2

THE Government could allow foreign airlines to pick up stake in domestic airlines at a later "yet-to-be decided" date.

The Minister for Civil Aviation, Mr Praful Patel, hinted at this possible policy change of the Government at a function during which the second part of the Naresh Chandra Committee report was released here on Tuesday.

The committee had been set up to draw up a road-map for the country's civil aviation sector.

"The present policy is not sacrosanct. Policy has to evolve. It does not mean that foreign airlines will never be allowed to invest in India," Mr Patel said, when questioned on whether foreign airlines will be allowed to invest in domestic airlines.

However, Mr Patel refused to speculate on the time frame by which foreign airlines will be allowed to pick up a stake in domestic airlines. At present, though foreign airlines are barred from picking up a stake in domestic airlines, the Union Cabinet had recently hiked the foreign direct investment (FDI) cap in the domestic aviation sector from 40 per cent to 49 per cent. Addressing the press conference here, the former Secretary, Civil Aviation, and a member of the Naresh Chandra Committee, Mr K. Roy Paul, said that before any change was made in the existing policy it would be necessary to ensure that airlines of India are able to stand on their own feet.

The move to allow foreign airlines to pick up a stake in domestic airlines has been opposed by sections in the Government for a variety of reasons, including the view that such a move would give the former indirect access to the Indian skies. However, the Naresh Chandra Committee had recommended allowing foreign airlines to invest in airlines of India.

At the briefing, Mr Patel also noted that the proposal to allow domestic airlines to fly to more destinations abroad could be taken up soon. "Private airlines will be allowed to fly abroad. We are going to the Cabinet and need not wait for the new civil aviation policy to be finalised. A decision may be taken by in a month's time," he said.

At present, domestic private airlines are allowed to fly to the seven nations of the South Asian Association of Regional Cooperation (SAARC).