India's revised civil aviation policy has led to charges of protectionism after it failed to set an investment limit for foreign airlines and airports in Indian carriers. The strategy is being viewed as another setback for Singapore Airlines' planned joint venture with Tata Industries, which remains on hold in the face of continued resistance from the aviation ministry.
The new investment policy sets a 40 per cent cap on stakes held by investors other than airlines and airports, while any airline owned and substantially controlled by an Indian national will have the right of entry to the Indian market. Non-resident Indians can invest up to 100 per cent.
Tata Group director Sujit Gupta has reacted to the continued but isolated opposition from the civil aviation minister, C M Ibrahim, by suggesting that SIA could be dropped as a partner in order to secure clearance. Ibrahim continues to oppose the Tata-SIA linkup in the face of support for the venture from the industry minister Murasoli Maran.
The powerful finance ministry has also publicly stated that it is not opposed in principle to the introduction of foreign airline investment.
Ibrahim maintains the Tata-SIA project will damage both Indian Airlines and incumbent private operators alike. But ironically the new aviation policy does little to encourage the independent airline sector, which has already witnessed the closure of East West and Modiluft, while NEPC is facing financial problems.
The minimum fleet size for scheduled airlines has been raised from three to five aircraft but restrictions on the size and type of aircraft have been lifted.
Source: Airline Business
