The Government of India is finally coming out with it’s Draft Civil Aviation Policy. Under this, the Government wants to up the FDI cap on investment in domestic airlines, and give a boost to regional airlines:
- Currently the FDI is limited at 49 percent of the paid up captial, which is proposed to be increased to 50 percent.
- An open sky policy, under which restrictions on number of flights operated in and out of India by foreign airlines will be lifted.
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- A 2 percent surcharge on domestic and international tickets to fund growth of regional sectors
- A Rs.2500 cap on regional flights upto one hour
- Give impetus to Maintanance, Repair and Overhaul (MRO) services, remove all service tax and VAT.
- Modify the 5/20 rule for international flights by domestic airlines, under which a airline has to be in business for a minimum of 5 years, with a minimum fleet strength of 20 aircraft.
All parties involved are being asked for their inputs on the policy, which have to be submitted within 3 weeks. Only then will the Government take a final decision on the matter.
