The Hindu Business Line : Cabinet unlikely to take up issue today

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Cabinet unlikely to take up issue today — PIO investment in domestic aviation

Our Bureau

New Delhi , Dec. 28

PERSONS of Indian Origin (PIO) wanting to invest in the domestic airline sector may have to wait a bit longer.

The Union Cabinet, which was earlier expected to consider whether PIO investment in domestic aviation sector should be treated at par with NRI investment at its weekly meeting here tomorrow, is now unlikely to take up the issue.

While refusing to confirm the Cabinet agenda, senior Government officials merely said, "The issue may come up tomorrow or may be deferred by a week."

Currently, NRIs are allowed 100 per cent FDI in domestic airlines. However, the guidelines issued by the Ministry of Civil Aviation require them to be citizens of India. PIOs are second- or third-generation Indians holding foreign passports. The proposal to allow PIO to invest in the domestic airline sector has already received the nod from the Ministry of Non-Resident Indian Affairs and the Ministry of Finance.

If the Cabinet does not take up the proposal and clear it tomorrow, the project of an NRI to set up a new airline — Magic Air — is likely to be delayed further.

During the monsoon session of Parliament, the Minister for Civil Aviation, Mr Praful Patel, said that the existing civil aviation requirements stipulate that scheduled or non-scheduled air transport operators permits can be granted only to Indian citizens or to a company or body corporate, provided substantial ownership and effective control remained with Indian nationals.

"Hence, PIOs, who are not Indian citizens, cannot be permitted to operate air transport services in terms of the current regulatory position," he added. The Government, however, has no intention of allowing foreign airlines to invest either directly or indirectly in the domestic sector just yet.

This, despite the Planning Commission's mid-term review of the Tenth Plan making a case for a review of the policy debarring equity participation in domestic air transport operations by foreign airlines.

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