Decision on FDI in aviation likely today

New Delhi: The government is likely to decide on a proposal to allow foreign carriers to invest in local airlines on Thursday. The government is likely to allow 49 per cent Foreign Direct Investment in the aviation sector. This will allow cash-strapped domestic airlines like Kingfisher to access funds more easily.

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 per cent.

The country's civil aviation ministry had in January recommended that the government allow foreign airlines to buy stakes of up to 49 per cent 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 per cent earlier in the day, closed 7.5 per cent up at 18.60 rupees on Tuesday on the National Stock Exchange.

Posted in: Business