Indian civil aviation minister Ajit Singh said Tuesday that he and the country's finance minister back allowing foreign airlines to own up to a 49% stake in Indian carriers "as soon as possible."
India's full cabinet will have to approve the proposal, seen as likely with Singh's backing. Foreign direct investment (with a 49% cap) in Indian airlines is currently allowed, but foreign airlines aren't allowed to invest at all. Singh told reporters in New Delhi that allowing 49% ownership of Indian airlines by foreign carriers "will help the [domestic airline] sector that is in financial stress".
Singh did not say how long it will take to formally remove the restrictions on foreign airline investment, but indicated he wants the process to move forward relatively quickly. According to reports from Indian media, the loosening of restrictions on airline investment fits well into Indian Prime Minister Manmohan Singh's overall strategy of allowing greater foreign investment in Indian companies.
While India's airlines have struggled financially in recent years, the country's demographic trends point toward expanded air travel in the future and likely will entice major industry players worldwide to consider taking significant stakes in Indian carriers.
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