GoM meeting on ATF import and FDI next week

With indications that government is keen to allow foreign airlines buy stakes in Indian carriers, a Group of Ministers (GoM) is likely to meet next week to decide on the investment cap by them, official sources said today. The GoM is also likely to take a decision on allowing Indian airlines import aviation turbine fuel directly and get some breather from the high sales tax regime, they said.

The GoM could meet early next week to take a final call on how much equity a foreign airline would be allowed to take in Indian carriers, they said. While a Committee of Secretaries has proposed a 49% cap on foreign direct investment (FDI) by foreign airlines, the Civil Aviation Ministry has asked the government to allow 24% and the Department of Industrial Policy and Promotion (DIPP) has recommended 26%.

At present foreign investment of up to 49% is permitted in the aviation sector, apart from 100% in MRO (Maintenance, Repair and Overhaul), airports, helicopter and sea-plane operations, but foreign carriers are not allowed to invest.

The GoM would also take a call on allowing the airlines to directly import jet fuel. While the Civil Aviation Ministry is in favour of the demands raised by airlines like Kingfisher, the Petroleum Ministry is understood to have raised certain objections.