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Union Budget: Airline FDI limit beyond 49%

The push from the government to increase FDI limits in aviation could help troubled airlines

  • Published 6.07.19, 12:26 PM
  • Updated 6.07.19, 12:26 PM
  • a min read
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An Air India aircraft (Shutterstock)

The aviation sector is set to soar with the government hiking the foreign direct investment (FDI) in domestic carriers from 49 per cent. The move could trigger interest in Air India’s strategic sale, make India a hub for financing aircraft purchases and leasing of planes and develop the country as a hub for maintenance, repair and overhaul.

“The government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders,” finance minister Nirmala Sitharaman said in her budget speech.

The push from the government to increase FDI limits in aviation could help troubled airlines such as Air India and Jet Airways to find buyers.

“As the world’s third-largest domestic aviation market, the time is ripe for India to enter aircraft financing and leasing activities,” the finance minister said.

“This is critical for the development of a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities in India’s financial Special Economic Zones,” she said.