The Hindu : National : 49 p.c. FDI cap for airports modernisation: Patel

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Thursday, Jun 03, 2004

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National

49 p.c. FDI cap for airports modernisation: Patel

By Vinay Kumar

NEW DELHI, JUNE 2 . The Congress-led United Progressive Alliance (UPA) Government decided today to reduce to 49 per cent the Foreign Direct Investment (FDI) limit in the joint-venture companies for modernisation and restructuring of the Delhi and Mumbai airports.

Addressing his first press conference after assuming charge of the Civil Aviation Ministry about a week ago, the Minister of State, Praful Patel, said the decision to put the cap on FDI at 49 per cent was taken after wide-ranging discussions with other alliance partners, mainly the Left parties. He said the airports modernisation project would not be delayed and all crucial decisions would be taken in 2004.

The remaining 51 per cent, will be held by the Airports Authority of India (AAI), Indian companies or promoters or financial institutions.

The previous National Democratic Alliance Government had allowed foreign investors to pick up to 74 per cent equity in the joint venture.

Mr. Patel announced that the last date for expression of interest was being extended to July 25 from the earlier June 4 deadline. He appeared confident that financial institutions, corporations and companies in India had the capability to make available the huge capital required.

The Minister said the FDI cap at 49 per cent in the proposed JV was keeping with the international trend and pattern followed in many foreign countries. There was no restriction on Indian consortiums to go up to 74 per cent as many Indian companies had the technical expertise and were taking up global projects.

He said the workforce at both the airports would be absorbed by the new company and AAI would take care of its employees.

"Not a single employee will be affected because of the modernisation of the Delhi and Mumbai airports. This is not the sale but only leasing for a certain period, that is why I am stressing upon restructuring and this can in no way be termed privatisation," he said.

The Minister said that modern, efficient airports were the long-felt need of the country and would play a key role in the growth of trade and commerce, apart from enhancing the image of the country.

He said that both the air and ground security aspects would remain firmly with the Government and the airport management would be under the majority control of Indian hands.

Fleet acquisition

Emphasising on expansion of the civil aviation sector in the country, Mr. Patel said for a billion plus population there were only 150 civil aeroplanes, which compared poorly with China, which has about 650 aircraft. "We need to expand and quickly.''

To begin with Alliance Air, a subsidiary of Indian Airlines, will get 11 new-generation single-aisle Airbus A-319 aircraft on lease. The leased aircraft would replace the ageing Boeing 737-200 aircraft of Alliance Air, which services regional and non-trunk domestic routes.

All the A-319 aircraft would join the airline between this October and June 2005.

"These aircraft, introduced only six years ago, will be relatively new with an average age of five years and less. Alliance Air will then have a much younger fleet,'' he said.

On fleet acquisition for Indian Airlines and Air India, Mr. Patel said the Government would like to have a fresh look at the plans. While the IA Board had approved the purchase of 43 Airbus A-320, the Air India Board had given its nod for acquiring a total of 27 Boeing and Airbus aircraft for its short and long-haul routes.

"Fleet acquisition programme for both Indian Airlines and Air India will be pursued vigorously. Though the two boards have already approved the plans, we would like another look at it in the changed global scenario. The purpose is not to delay but to get the best deal so that both carriers can compete,'' he said.

Mr. Patel assured that the Government would neither reverse the previous Government's decisions nor delay the process of either modernisation of airports or fleet acquisition.

He said that a new, comprehensive civil aviation policy, reflecting the long-term concerns and future growth plans of Air India and Indian Airlines, would be put in place before this year-end.

He said that the recommendations of the Naresh Chandra Committee, which had given its report to the NDA Government, would be discussed in detail.

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