Economy Sep 13, 2012
Trinamool Congress chief Mamata Banerjee has finally agreed to the proposal for much-needed foreign direct investment in the aviation sector,although cash-strapped Air India may be excluded from the FDI proposal, government sources told CNN-IBN today.
The government had earlier put off the proposal to revive the civil aviation sector, due to stiff opposition from the West Bengal Chief Minister.
Shares of aviation companies were up on hopes that the government may finally approve the proposal on Friday.
SpiceJet was up 2.5 percent at Rs 32.40, Jet Airways was up 1.3 percent at Rs 356 and Kingfisher Airlines 2.5 percent at Rs 9.75.
Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49 percent stake. If the proposal is approved, foreign airlines will be allowed to have majority shareholdings in Indian airline companies.
Indian carriers, led by struggling Kingfisher Airlines have long lobbied for the move, which they hope will provide much-needed funds to keep them afloat.
The Cabinet Committee on Economic Affairs is likely to discuss and clear FDI in aviation tomorrow. The proposal is expected to be sent to the Cabinet for approval some time next week.
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