CAPA India: Foreign airline investment will bring much needed long-term capital and expertise
The long-awaited decision by the Indian Cabinet on 14-Sep-2012 to approve foreign airline investment in Indian carriers finally brings to an end a regulatory anomaly that has existed for more than 15 years. India already permits 49% foreign direct investment (FDI) in the airline sector, but since 1996 the regulations - unique in the world - have specifically excluded the one class of investor that has the greatest strategic interest and can add value to the sector, namely foreign airlines.
In the 1990s when deregulation allowed the entry of private carriers on domestic routes, initially as air taxis and subsequently as scheduled airlines, India permitted up to 40% foreign direct investment, including by foreign airlines. Jet Airways at the time in fact maximised this provision, with both Gulf Air and Kuwait Airways each holding a 20% stake in the fledgling airline. This strategic investment undoubtedly provided Jet Airways with a number of benefits including access to expertise and international feed.
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