IB raises red flag over allowing 100% FDI in domestic airlines

July 12, 2017 01:05

The Intelligence Bureau has raised serious concerns over the government's proposal to allow 100 per cent foreign direct investment in local airlines citing security issues, a source said.

Concerns were raised during a meeting chaired by Home Secretary Rajiv Mehrishi which was attended by senior officials from the civil aviation ministry and the IB. The meeting, held last month, was convened to discuss issues related to proposed amendments to the Aircraft Rules, 1937.

To a query about the concerns raised by the IB, Civil Aviation Minister Ashok Gajapathi Raju said nothing has come to his notice.

If anything comes and concerns are raised, then they have to be looked into, he told television channel CNBC-TV18 in an interview.

He also said the Cabinet decision on allowing 100 per cent FDI in airlines holds.

The amendments to the Aircraft Rules are required to operationalise the framework for allowing foreign non-airline players to own up to 100 per cent stake in domestic carriers. While the liberalised FDI policy was announced last year, it can be implemented only after putting in place the relevant rules.

According to the source, who is not authorised to speak to the media, the IB is of the view that foreign players should not be allowed to have 100 per cent stake in domestic airlines as aviation is a "highly sensitive sector".

During the meeting, the IB also submitted that even developed countries like the US and Canada have permitted foreign entities to have only up to 25 per cent stake in their respective domestic carriers.

Another concern raised was on the grounds that many airports having commercial operations are with the defence establishment. Allowing foreign players to fully own domestic carriers might pose threat to national security, especially during the times of conflict, the source said.

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