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No raising 49 pc FDI cap in aviation sector

The government has ruled out raising the 49 per cent FDI cap in the Indian aviation sector. 'The 1934 Civil Aviation Act says the management has to be in Indian hands. Majority of directors have to be Indian. Whatever worries people have, the government will still decide the routes, government will still give at what time they fly and where,' the civil aviation minister Ajit Singh told reporters while replying to a query.

The government allows foreign direct investment in domestic airlines up to 49 per cent but has been disallowing foreign airlines from investing in the sector. However, now it is planning to allow foreign airlines to pick up 49 per cent stake in their Indian counterparts.

'It is a capital-intensive industry … [The airlines] are not even getting working capital. It is only if you allow them to, airlines to invest 49 per cent. FDI is already allowed. We are not asking anybody to take it. It is not compulsory. Those who do not want it, [it is] fine,' he said, when it was pointed out that some airlines favoured raising the 49 per cent FDI cap.

The ruling coalition partners are also being brought on board on the issue of FDI in aviation, Singh said on the sidelines of a book-release function.
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