FDI Inflows to Air Transport

The FDI Inflows to Air Transport industry of India is allowed up to 74% foreign equity participation through the automatic route. 100% FDI is allowed in the airport infrastructure segment. The Indian cities of Bangalore and Hyderabad to be facilitated with two new greenfield airports.

With the opening up of the air transport industry of India to FDI, this industry is witnessing substantial participation from private airlines in India. The FDI in the transport industry of India is thus witnessing an overall participation of 60% of the domestic aviation market in India.

Further, the opening of the transport industry of India to FDI has seen a substantial increase in air traffic flow in India. A number of budget airlines in India has made inroads in to the Indian air transport industry. As a result of which the domestic air traffic in India has increased from 10 million in 2003 to 25 million in 2004.Furthermore, it is estimated that the domestic air traffic of India will add five million passengers every year till the end of 2009. The ministry of civil aviation, government of India envisages an average annual growth 16% per annum till 2010. Moreover, the FDI in the air transport industry of India is expected to generate employment to the tune of 10 million jobs in the next ten years.

Highlights of the FDI policy in air transport industry of India:

• The ministry of civil aviation, government of India allows foreign direct investment up to 74% foreign equity participation through the automatic route


• For 100% FDI in the airport infrastructure, which comes under the air transport industry of India, special permission should be sought for the government of India


• International airport authorities can also make such investments


• 100% FDI is allowed in modernization of Indian airports, but FDI above 74% needs government of India approval


• For domestic airlines, up to 49% of FDI is allowed


• NRIs can also make such investments up to 100% through the automatic route

Positive effects of FDI inflow into the Indian air transport industry:

• The modernization process of the busiest airports of India, the Mumbai and the Delhi airports have been initiated
• Bangalore and Hyderabad to be facilitated with two new greenfield airports
• Jaipur airport has been promoted to the class of international airport
• 25 more airports are on the anvil of modernization

Last Updated on 4/23/2011