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Flight hurdles
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Mumbai, Sept. 16 (PTI): The government’s move to allow foreign carriers to invest in cash-strapped domestic airlines is unlikely to usher in benefits unless issues of high-taxes and infrastructure cost are addressed, says global airlines body IATA.
The decision, however, is positive and opens up wider opportunities for overseas players.
“Allowing foreign direct investment by global airlines by itself is not a panacea. The critical problems of a high cost environment, insufficient infrastructure and crippling taxes must also be addressed within a co-ordinated government-wide policy framework,” International Air Transport Association (IATA) India director Amitabh Khosla said.
Stating that the FDI decision is an important step, Khosla said it allowed domestic carriers to have strategic tie-ups with foreign airlines cemented by an equity stake. On Friday, the government allowed 49 per cent equity participation by foreign airlines in domestic carriers.
While companies have hailed the decision, some political parties such as the BJP and the Left as well as some of the UPA allies such as the Trinamul Congress have criticised the move terming it as a “decision taken under pressure from the India Inc”.
The Centre for Asia Pacific Aviation and G.R. Gopinath, founder of the low-cost airline model, had earlier called for rationalisation of taxes and putting up a seamless infrastructure to reap the benefits of overseas investments.
“It is good for the industry and the common man. We need more airlines and this move will bring a number of overseas carriers to India. But at the same time, there are some issues such as GAAR, retrospect tax amendment and others which are around,” Gopinath had said.
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