Govt likely to decide on aviation FDI on Thursday - official

NEW DELHI Wed Apr 11, 2012 10:09am IST

A passenger aircraft is silhouetted against the setting sun in New Delhi October 12, 2008. REUTERS/B Mathur/Files

A passenger aircraft is silhouetted against the setting sun in New Delhi October 12, 2008.

Credit: Reuters/B Mathur/Files

Stocks

   

NEW DELHI (Reuters) - The government is likely to decide on a proposal to allow foreign carriers to invest in local airlines as early as Thursday, a senior government official said, which could provide a lifeline to cash-starved and debt-laden carriers like Kingfisher Airlines (KING.NS).

"The decision is imminent," said the official at Department Of Industrial Policy and Promotion, referring to a proposal to allow foreign carriers to invest in local airlines.

"It may be as soon as Thursday."

He, however, declined to say what the proposed foreign investment cap would be.

Indian airlines have been battered by rising fuel costs, high taxes and fierce competition in a market where five of the six main operators are losing money.

India currently bars foreign airlines from picking up stake in Indian carriers, although foreign investors are allowed to hold a cumulative 49 percent.

The country's civil aviation ministry had in January recommended that the government allow foreign airlines to buy stakes of up to 49 percent in Indian carriers. The proposal, however, needs approvals from the trade ministry and the union cabinet to become law.

Kingfisher Airlines, which has a debt load of $1.3 billion, has said foreign airlines have expressed interest to invest in the company, and that those investors are just awaiting a formal government approval.

Kingfisher shares, which were down as much as 4.6 percent earlier in the day, closed 7.5 percent up at 18.60 rupees on Tuesday on the National Stock Exchange.

(Reporting by Matthias Williams; writing by Anurag Kotoky; editing by Malini Menon)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage