Shares of aviation companies flew higher on hopes that foreign direct investment will be soon allowed in the sector. A proposal for 49% FDI in the sector has been sent for cabinet approval, reports CNBC-TV18.
While Jet Airways was up 8.22% to Rs 254.20, Kingfisher Airlines too was up 6% to 26.60. Delhi-based SpiceJet too followed trend was was quoting 7% up to Rs 23.90.
These airlines have been posting losses in the past few quarters and have been seeking FDI in the sector for the past two years. After taking a note of the critical situation that carriers are going through, a key group of minister reached a consensus on allowing foreign airlines to pick up stakes in Indian carriers.
Meanwhile, experts say if foreign investment comes in the sector, airlines will be relieved on the financial strain on their balance sheets and will also be able to raise funds which they have not been able to do due to volatile market conditions.
Also, international carriers like British Airways and Singapore Airlines among others have in the past shown interest in investing in Indian carriers. Simultaneously, the sector requires over Rs 6,000 crore merely to address their losses and to also enhance capacities.
