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Indiaexportnews.com

India gives okay to foreigners buying 100pc of local airlines

  27.06.2016    

India will allow foreign entities such as funds and portfolio investors to fully own local airlines, raising from an earlier cap of 49 per cent, in a bid to lure investment into Asia's third-biggest economy.
Foreign investment limits in commercial airlines will be increased to 100 per cent, with anything above 49 per cent needing approvals, the government said in a statement.
Prime Minister Narendra Modi's administration, however, decided to keep the restrictions on foreign airlines' stake in local operators at 49 per cent, according to Bloomberg.
The rule changes follow days after Modi unveiled a new aviation policy that made it easier for domestic operators to fly abroad. Although the revamp won't allow Singapore Airlines or AirAsia or Etihad Airways to raise their stakes in local ventures beyond 49 per cent, they can still join hands with overseas investors to set up a fully foreign-owned airline, said KPMG consultant Amber Dubey.
"The government plans to go for a massive improvement in India's global and domestic connectivity, affordability and ease of doing business," said Mr Dubey. "Indian carriers can look for enhanced valuations in case they wish to raise funds or go for partial or complete divestment. We may see its positive impact over the next six to 12 months."
The government also raised investment limits on investment in existing airports as well as defence. The cap on investment in so-called "brownfield project" has been increased to 100 per cent from 74 per cent, without the need for approvals, according to the statement.
The government also allowed foreign investment beyond 49 per cent in defence, subject to approval in cases that help bring in "modern technology", according to the statement.



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