India's mercurial foreign ownership rules are again causing controversy, with an apparent split between ministries over whether airline partners will be allowed to buy shares in either Air-India or Indian Airlines as they come up for privatisation.
Civil aviation minister Ananth Kumar plans strict enforcement of the domestic aviation guidelines, which prevent any foreign airlines from buying into local carriers. Yet the Disinvestment Commission suggests that the same rules may not apply to finding a partner for international flag carrier Air-India.
The Commission has recommended that 60% of Air-India be sold, including up to 40% for a strategic partner, while the finance ministry has proposed that the state sells a majority 51% of Indian Airlines. Kumar has set a one-year timeframe for starting the sales.
The civil aviation ministry seems unable to tolerate any foreign airline involvement in its domestic carriers, but other ministries, including industry and finance, have argued the benefits of fresh capital and technology that a partner could bring.
Even under the country's previous open skies policy, which had allowed foreign equity in domestic carriers, the Tata group and Singapore Airlines found their joint airline proposal put on hold. A frustrated Tata has since withdrawn. As the door to foreign airlines closed, Gulf Air and Kuwait Airways were also forced to sell their 40% joint share of local carrier Jet Airways.
Source: Airline Business
