India is to allow foreign airlines to take up to 49% shares in the country’s carriers in a move designed to bring long-needed investment to the country’s aviation sector.
The policy change, approved by the government in Delhi on Friday, could clear the way for British Airways’ parent IAG to take a stake in an Indian carrier.
Foreign companies have been permitted to own stakes in Indian airlines up to now, but overseas carriers were barred from taking shares.
IAG has previously indicated it could take a stake in troubled Kingfisher Airlines. However, this seems unlikely after Kingfisher went into near-terminal decline this year.
Kingfisher and SpiceJet have been at the forefront of airlines urging the government to allow foreign airlines to buy stakes.
Aviation minister Ajit Singh said the move had been taken because the sector has been under financial stress.
India’s Economic Times quoted Amber Dubey, head of aviation practice at KPMG in India, saying: “Allowing 49% stakes to foreign airlines will create access to capital, global connectivity, technology and best practices.
“This could lead to the establishment of new airlines in India and changes in ownership structure of Indian carriers.”
Most Indian carriers lose money despite a boom in the sector.