Foreign investors should not control Indian carriers: Govt

After allowing FDI by foreign carriers in their Indian counterparts, the government has put in place provisions to prevent Indian airlines from being controlled and managed by the foreign investor.

Several changes have been carried out in the existing rules or Civil Aviation Requirements (CARs), including one which clearly states that a passenger airline "shall not enter into an agreement with a foreign investing institution or a foreign airline, which may give such foreign investing institution or foreign airlines or others on behalf of them, the right to control the management of the do- mestic operator."

It also says that the foreign investing institution or entity including a foreign airline would not have more than one-third representation in the Board of the Indian carrier, official sources told PTI.

The amendments to the relevant CARs came in the wake of fair-play regulator Competition Commission of India stood by its observation about Abu Dhabi carrier Etihad gaining joint control in Jet Airways and "significant" rights to appoint directors with a 24 per cent stake purchase.

Apart from these amendments, the government also tightened the norms for companies planning to launch an air carrier to en- sure that they have the necessary financial backup and commitment to enter aviation business, they said.

These changes came as two airlines - Kingfisher and Paramount - went bust.

The changes in the existing CARs included that the entire equity amount would have to be available a company which wants to start an airline, at the time it applies for a No-Objection Certificate from the Civil Aviation Ministry.

At present, the paid-up capital required by a company which plans to fly large aircraft (over 40,000 kg) is Rs 50 crore. For those which want to fly planes having less than 40,000 kg weight, the amount is Rs 20 crore.