With ruling and opposition parties opposed to slackening norms to allow foreign investment in domestic sector, it'll be a long time before cash-strapped carriers can expect funds to flow in
While the cash-strapped airlines are scurrying for a more relaxed Foreign Direct Investment (FDI) policy for the opening up of the Indian skies, lack of political consensus is playing spoiler for the ailing carriers.
Sources close to the union government and political partners of the Congress-led UPA II told MiD DAY that any change in the FDI policy is possible only after an inclusive discussion, which is bound to be time-consuming.
The government currently allows 49 per cent FDI in the aviation sector, but at the same time, it restricts any direct or indirect investment by foreign airlines or their arms in the domestic aviation sector. A relaxation in the restriction would fly in the much-needed strategic funds for the impoverished airlines industry.
"Till date, there is no consensus on whether foreign airlines should be allowed to invest in the Indian aviation sector. We can only say that it is possible after a comprehensive debate which will certainly take more time," said a source close to the union finance ministry.
Changes in existing FDI policy have been debated for long, but after the recent fiasco of chain flight cancellations by hard-up Kingfisher Airlines, the issue has gained momentum again. But consensus building will require the political right, left and centre to concur on the matter.
Political parties like the CPM and the BJP have, predictably, and preemptively, opposed any deviation from the existing policy. Even within the government, there is strong resistance to the idea, notwithstanding PM Manmohan Singh's utterance that he would find ways to help Kingfisher.
"There is no point in supporting any change in the current format of FDI. If it happens, we will oppose it," said a politician from the UPA II coalition.
Sources close to the banking sector have clearly stated that they would only help cash-strapped carriers if they get proper equity infusion from loss-making airlines. "We are already facing losses due to Non Performing Assets (NPS) and we don't want to continue the policy further," said a leader representing a banks' union.
Meanwhile, Kingfisher Airlines is expected to make some important announcements at a press conference by UB group chairman Vijay Mallya this afternoon.