India may allow foreign airlines to invest in local carriers
The government is likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers, industry secretary said yesterday.
"It is likely to happen," RP Singh told Reuters over the phone, when asked if a proposal to allow foreign airlines to invest in Indian counterparts would be approved by the government.
India allows foreign investment of up to 49 percent in Indian carriers, but foreign airlines are not allowed to invest directly or indirectly in domestic carriers.
The proposal will come as a lifeline to struggling Indian carriers saddled with high debt and mounting losses in a crowded and competitive Indian aviation market.
Kingfisher, whose auditor had recently said that the airline needs fresh funds to remain viable, rose nearly 6 percent. Jet Airways rose 3.6 percent, while SpiceJet advanced 4 percent.
The Department of Industrial Policy and Promotion and the Civil Aviation Ministry differ on the quantum of stake that foreign airlines be allowed to pick up, government sources told Reuters on Monday.
While the industry ministry wants foreign airlines to be allowed to take 26 percent stake, the civil aviation ministry wants it capped at 24 percent, the sources said.
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