Increasing the current aviation FDI cap might help troubled airlines, like Air India and Jet Airways, find buyers.
File photo of Finance Minister Nirmala Sitharaman.
The government is contemplating a budget announcement to hike the foreign direct investment (FDI) limit in the aviation sector from 49 per cent to 100 per cent to attract international bids for Air India, slated for sale this financial year. The current aviation FDI cap was not attractive enough and an increase would help troubled airlines, like Air India and Jet Airways, find buyers, sources said. The Substantial Ownership and Effective Control (SOEC) clause bars any foreign investor from taking complete control of an airline, run by a board that has two-third members as Indians.
In the last budget speech in July, Finance Minister Nirmala Sitharaman said the government proposed to hike the FDI limit in domestic air carriers from the 49 per cent. “The government will examine suggestions of further opening up of the aviation, media (animation, AVGC) and insurance sectors in consultation with stakeholders,” she had said.