- By James Kuanal
- Thu, 30 Jan 2020 06:58 PM (IST)
- Source:JND
New Delhi | Jagran Business Desk: With just a couple of weeks left for the Budget day 2020, the preparations are in full swing. Amid all expectation and hopes in the aviation sector, Modi government is likely to announce a hike in Foreign Direct Investment (FDI) from 49 per cent to 100 per cent to attract bids for the debt-ridden Air India and Jet Airways, slated for sale in 2020, reported IANS.
As per the report, the current FDI cap was not attractive enough and an increase would benefit the troubled carriers Jet Airways and Air India find buyers.
The Substantial Ownership and Effective Control (SOEC) prevents any foreign investor from taking control of any airline in India, run by a board that has two-third Indians.
In the previous budget in July, Finance Minister Nirmala Sitharaman had said that the government has proposed to hike FDI limit in domestic carriers.
As of now, 100 per cent FDI in the aviation sector is only allowed under automatic route for MR0 ( Maintenance, Repair and Overhaul), aircraft purchase and ground hailing.
"In the airline operation, there is an issue of substantial ownership and effective control. Thus, the Civil Aviation Ministry will have to see all these to sell Air India, which would require liberalising FDI in the sector," IANS quoted an official as saying.
"The 100 per cent FDI will have a better effect on the Air India bidding prospects. The Civil Aviation Ministry is in the loop," sources told the news agency.
Also Read: Union Budget 2020 | Agriculture sector remains key prospect to fix slowing economy
Jet Airways has been grounded since April 17 last year. The carrier owes over Rs 8500 crore to banks, lessors, and suppliers among other entities. Air India on the other hand which has grounded over a dozen of airlines has a debt burden of nearly Rs 60,000 crore.