Minister of State in the Ministry of CIVIL AVIATION ( SHRI K. C. VENUGOPAL )
(a) to (d): Yes, Madam. The private airlines in the country are in dire need of funds for
their operations and service upgradation to compete with other global carriers. Denial
of access to foreign capital could result in the collapse of domestic airlines, creating a
systemic risk for the financial institutions, and a vital gap in the country`s
infrastructure. Hence, Government has decided to permit foreign airlines to invest in the
capital of Indian companies operating scheduled and nonscheduled air transport services, up
to the limit of 49 percent of their paid-up capital. The purpose of removing the existing
restriction on investment by foreign airlines is to bring in strategic investors, as few
private equity investors would be willing to invest in a risky business like civil aviation.
(e) and (f): Foreign airlines like Air Asia, Farnair etc.have shown interest to invest
in the aviation sector in India.To protect the indigenous interest, the provision
for investment by foreign airlines has been made subject to conditions which include:
(i) It would be made under the Government approval route.
(ii) The 49 percent limit will subsume FDI and FII investment.
(iii)The investments so made would need to comply with the relevant regulations of SEBI.
(iv)A Scheduled Operator`s Permit can be granted only to a Company:
a) that is registered and has its principal place of business within India.
b) the Chairman and at least two-thirds of the Directors of which are citizens of India and
c) the substantial ownership and effective control of which is vested in Indian nationals.
