India likely to ease FDI rules and allow foreign airlines to hold 49% stake in domestic airlines
MoCA’s proposal for allowing foreign airlines to pick up a stake in domestic airlines has moved ahead and foreign airlines are likely to be allowed to hold a 49 per cent stake in scheduled, non-scheduled and charter airlines. The change in the FDI rules, if approved, will immensely help the 15 scheduled airlines and 98 non-scheduled operators. At the moment foreign airlines are barred from holding a direct or indirect stake in the domestic airline sector. As the world's second-fastest-growing major economy plans to scrap investment restrictions, Singapore Airlines, Virgin Atlantic Airways and other carriers could win rights to buy into Indian airlines. With global traffic plunging amidst a recession, India's move may give foreign airlines a slice of a market that's set to surge nine-fold in the two decades to 2026. The plan will also give carriers such as Jet Airways and SpiceJet access to cash and expertise amid a record $2 billion industrywide loss last year. Experts believe India is one of the countries where there are some opportunities to make some money out of aviation which could be a big plus. India's domestic air traffic is expected to grow 11.5 percent through to 2026, making it the world's fastest-growing aviation market. In comparison, China's domestic traffic will grow 8.4 percent and the U.S., currently the world's largest aviation market, will grow 2.4 percent.
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