Security concerns could again derail the Government's plans of allowing foreign airlines to pick up a minority stake in Indian carriers.
“There are still concerns in certain quarters about allowing investment from some countries. We cannot be selective about allowing country ‘A' to invest in a domestic airline but shooting down the proposal of country ‘B'. In the given scenario, the proposal to allow a foreign airline to invest in domestic carriers is likely to hit a road block at the moment,” a person in the know said.
Recently, the Department of Industrial Policy and Promotion moved a proposal to allow foreign airlines to pick up a minority stake in domestic airlines. At the moment, foreign airlines are barred from having a direct or indirect stake in a domestic carrier. A final decision on whether to allow or disallow foreign airlines to pick up equity in Indian carriers will only emerge after the Cabinet either accepts, rejects or keeps the proposal in abeyance.
Incidentally, in 2009, too, it was security concerns which prompted the Government to put the proposal to allow foreign airlines to invest in domestic carriers in cold storage.
Domestic airlines divided
There is also said to be a divide among the domestic carriers on the proposal. While some, including Kingfisher Airlines, are said to be keen that the proposal goes through, the other carriers are not that keen at the moment.
Meanwhile, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, has also indicated that the proposal for FDI in aviation and retail is unlikely to go through just yet.
The Deputy Chairman told a news channel that there were no plans for FDI in aviation or retail because of a lack of political consensus.