Security riders on FDI by foreign airlines

The government’s proposed policy allowing foreign carriers to pick up stakes in Indian airline companies will come with certain security riders. The Civil Aviation Ministry is likely to restrict investments by carriers from countries considered “sensitive” by the security establishment. According to sources, although these security conditions may not be spelt out for the public, investments from such countries will be put under tighter scrutiny. Such foreign direct investment (FDI) proposals could be routed through the Home Ministry for clearance and the investor could be asked to provide details such as sources of funds and parentage, according to a report by The Financial Express.

The government’s plan is to allow foreign airlines to buy up to 49 per cent stake in the cash-strapped, debt-laden Indian carriers. Already, there are country-specific restrictions for FDI in “sensitive sectors” such as Telecom, Nuclear Energy, Oil and Gas and Mining.