FICCI pitches for 100% FDI in aviation sector

Suresh Dharur

Tribune News Service

Hyderabad, March 18

India should go for 100% FDI in airlines sector to realise the full potential of the country’s aviation industry, a joint report of FICCI-KPMG has suggested.

The report was released yesterday at the ongoing India Aviation show 2016 here. Noting the rapid growth that Indian civil aviation sector has been witnessing over the past few years, the report pitched for open sky policy and urged the government to finalise the civil aviation policy at the earliest to resolve the vexed issue of international flying norms for local carriers.

At present, government allows up to 49% investment by a foreign airline in an Indian carrier. However, it has proposed to hike it to over 50% in the draft policy unveiled in October last year.

“For super-charging growth in the aviation sector, urgent remedial measures are required. India needs to be promoted as a trade and tourism hub in order to derive synergistic benefits for the aviation industry. Leading aviation hubs like the US, EU, UAE, Singapore and China have a robust industrial, trading, maritime and tourism ecosystem that both supports and benefits from their aviation sector,” the report said and called for close collaboration between Ministry of Civil Aviation and related ministries.

With 81 million trips, the domestic aviation market grew at over 20% during January-December 2015, the highest growth rate recorded in the world.

The Indian civil aviation industry, it said, has exhibited tremendous resilience to the global economic slowdown and ranks ninth in the global civil aviation market. This is attributed largely to the growing economy, increased competition among airlines, especially among low-cost carriers, modern airports, greater use of technology, FDI and increased emphasis on regional connectivity.

Noting that the new aviation policy is likely to provide a significant fillip to the industry, the report said various fiscal and monetary incentives, liberal policies focused on ease of doing business and enhanced push for regional and global connectivity are extremely positive.

Steps taken to revive and operationalise around 160 airports in India, if chosen carefully, will improve air connectivity to regional and remote areas. Public-Private Partnerships in the sector will get substantial support from the state in terms of financing, concessional land allotment, tax holidays and other incentives.

“Enormous growth in domestic passenger traffic, decrease in global crude oil prices and airlines showing profits indicate a significantly positive transformation for the Indian civil aviation market,” said Harshavardhan Neotia, president, FICCI.