Cabinet Approval: Foreign Direct Investment Policy on Civil Aviation

On March 4, 2020, the Union Cabinet under PM Modi cleared the Foreign Direct Investment Policy on Civil Aviation. According to the policy, 100% FDI is permitted in the air transport services. Earlier only 49% was available for sale to NRIs

Benefit

The main benefit of the policy is that it will help in divestment of Air India. The amendment in the policy will permit NRIs to invest in Air India. The policy will also improve ease of doing business in the country.  It will also contribute to growth, income and employment.

Concern

The policy says that for Air India the foreign investment shall not exceed 49%. This means that though 100% FDI is allowed, the automatic route is open only to NRIs.

Other Airlines

For other airlines other than Air India, 100% FDI is permitted under automatic route. This includes domestic, scheduled and other air transport services.

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