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The Civil Aviation sector has seen major reforms being enacted by the government in June 2016. First, it approved the new Civil Aviation Policy on 15 June, 2016, and on 20 June, 2016, it relaxed the FDI norms.
Liberalised FDI norms
The extant FDI policy on airports permits 100 percent FDI under automatic route in greenfield projects, and 74 percent FDI in brownfield projects under automatic route. FDI beyond 74 percent for brownfield projects is under government route. With a view to aid in modernization of the existing airports to establish a high standard and help ease pressure on the existing airports, it has been decided to permit 100 percent FDI under automatic route in brownfield airport projects.
As per the prevailing FDI policy, foreign investment upto 49 percent is allowed under automatic route in scheduled air transport service/domestic scheduled passenger airlines, and regional air transport service. It has now been decided to raise this limit to 100 percent, with FDI upto 49 percent permitted under automatic route, and FDI beyond 49 percent through government approval. For NRIs, 100 percent FDI will continue to be allowed under automatic route. However, foreign airlines will continue to be allowed to invest in the capital of Indian companies operating scheduled and non-scheduled air-transport services upto the limit of 49 percent of their paid up capital and subject to the laid down conditions in the existing policy.
Salient features of the new Civil Aviation policy
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Enabling Indians to fly at Rs 2,500 per hour under Regional Connectivity Scheme at unserved airports
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Requirement of five years of domestic flying for starting international operations removed
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Flexible and liberalized ‘open skies’ and ‘code share’ agreements
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Incentives to MRO sector to develop as hub for South Asia
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Ensuring availability of quality certified 3.3 lakh skilled personnel by 2025
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Development of greenfield airports and heliports
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Enhancing ease of doing business through deregulation, simplified procedures and e-governance
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Promoting ‘Make In India’ in Civil Aviation Sector
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Recent Developments
The West Bengal government, under the new Regional Connectivity Scheme, seeks to develop two new airports at Malda and Coochbehar. The projects will be taken up under a public-private partnership (PPP) model. If Bengal gets the Centre’s nod to proceed, the Viability Gap Funding (VGF) will be shared between the central ministry and the state government at 80:20 ratio.
Supreme Infrastructure India has been declared L1 in the two EPC projects of CIDCO worth Rs 397.68 crore, for land development of Navi Mumbai International Airport. Gayatri Projects has also bagged a Rs 700 crore EPC contract from CIDCO for land development of the Navi Mumbai International Airport.
Boeing and Tata Advanced Systems have rolled out a new facility in Hyderabad for their joint venture named TATA Boeing Aerospace (TBAL). The joint venture has been established to co-produce Boeing AH-64 Apache helicopter fuselages and other aero structures, as well as to pursue integrated systems in aerospace.
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