Thursday, March 7, 2013

DGCA Guidelines for FDI in Civil Aviation Sector


The foreign direct investment (FDI) regime in the civil aviation sector has been progressively liberalized over a period of time. The latest round was effected in by the Department of Industrial Policy & Promotion, Government of India in September 2012 by which foreign airlines are now allowed to invest in the Indian civil aviation sector up to a limit of 49% under the Government approval route.

Last week, the Director General of Civil Aviation (DGCA) issued the “Guidelines for Foreign Direct Investment in the Civil Aviation Sector” which plays the role of operationalizing the revised FDI regime. It deals with the specific rules pertaining to various aspects of the civil aviation sector separately: (i) scheduled air transport service / domestic scheduled passenger airline, (b) non-scheduled air transport service / non-scheduled airlines / chartered airlines, (c) cargo airlines (scheduled or non-scheduled), (d) helicopter services / sea plane services, and (e) maintenance and repair organizations, flying training institutes and technical training institutes.

In each of these types of activity, the issues pertaining to direct or indirect FDI, rules regarding management, personnel, information to be submitted to obtain government permissions and similar matters have been extensively dealt with.

The move to allow foreign airline participation has generated a tremendous interest on the part of foreign airlines in the Indian civil aviation sector (here, here and here).

2 comments:

Anonymous said...

Any views on the "comma controversy" in relation to the Air Asia - Tata greenfield joint venture, which is under consideration of the FIPB. There was an excellent article on the ET on this?

Umakanth Varottil said...

It is not clear if the semantics can play a "make-or-break" role here, as much as the intention and the philosophy behind the policy. In any event, that seems to have attracted a lot of attention in the media. The fact that the approval has been granted in a way automatically resolves the issue (though it would help for the future if the drafting is made unequivocal).

Interesting discussions also on First Post (http://www.firstpost.com/business/airasia-tata-jv-and-the-importance-of-punctuation-651426.html) and Business Standard (http://www.business-standard.com/article/economy-policy/i-also-know-english-ajit-singh-113030800011_1.html)