New Delhi, Aug. 19: The Planning Commission is supporting the finance ministry in allowing foreign airlines pick up stakes in domestic aviation companies.
The finance ministry favours a higher foreign direct investment limit in aviation than the present 49 per cent.
It also wants equity investments by foreign airlines, at least as minority partners.
North Block feels foreign airlines can bring not only the much-needed funds but also technical expertise in the aviation sector.
A group of ministers has been formed on the proposed civil aviation policy after differences arose over foreign investments and other issues.
Planning Commission officials said the body was expected to support the finance ministry on the issue and had already prepared internal policy papers.
However, the civil aviation ministry, backed by established players such as Jet Airways and Air India, feels foreign airlines are interested in India merely to feed global routes.
Support for foreign airlines has come from smaller players such as SpiceJet which are facing mounting pressure on their bottomlines.
“Besides the spat between ministries over broader principles, there is a corporate lobbying war going on behind the scenes over various aspects of the aviation policy,” officials from the civil aviation ministry said.
The officials said an option before the group of ministers was to agree to a review of shareholding patterns in the near future, while going ahead with the current FDI rules.
The government allows up to 49 per cent foreign investment in domestic airlines but does not permit direct or indirect investments from foreign airlines.
Also on the agenda of the ministers is a proposal to allow domestic carriers fly abroad earlier than the present norm.
The government has received many representations from airlines on this issue. Kingfisher and SpiceJet say startups such as Jazeera Airways have been allowed into India, while they are bottled up within the country.
Domestic airlines with at least five years of experience and a fleet of 20 aircraft are allowed to operate international flights. The aviation ministry now wants the government to give an in-principle nod to relax norms on a “need basis.”
Some of the alternatives available before the government are reducing the five-year condition to three or domestic carriers lacking the experience may be allowed to fly on less popular routes which the government is keen to promote.
Other ministries want the guidelines to be specific on the airlines that will be allowed to fly abroad and on destinations.
“Our policy has to be to break monopolies and not create new ones through a set of rigid licensing standards,” finance ministry officials said.