Changes in FDI in Civil Aviation

The Department for Promotion for Industry and Internal Trade (‘DPIIT’), Ministry of Commerce and Industry has issued Press Note 2 (2020 Series) dated March 19, 2020 which seeks to amend the Consolidated Foreign Direct Investment Policy dated August 28, 2017 with respect to foreign direct investment (‘FDI’) in civil aviation, which will be effective upon notification of corresponding amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (‘NDI Rules’). The key changes are: (a) while foreign investments in Air India Limited should not exceed 49% (directly or indirectly), foreign investment by non-resident Indians, who are Indian nationals, is to be permitted up to 100% under automatic route; and (b) FDI in civil aviation will be subject to provisions of the Aircraft Rules, 1937, which, inter alia, prescribe that an ‘Air Operator Certificate’ to operate scheduled air transport services (including domestic scheduled passenger airline or regional air transport service) can be granted to a body corporate provided that: (i) it is registered and has its principal place of business within India; (ii) its chairman and at least two-thirds of the directors are citizens of India; and (iii) the substantial ownership and effective control is vested in Indian nationals.

Published In:Inter Alia - Quarterly Edition - March 2020 [ English Chinese japanese ]
Date: March 30, 2020