FDI In Civil Aviation Sector Of India Under Consolidated FDI Policy Of India 2012

This is in continuance of our series on consolidated FDI policy of India 2012 by DIPP. The previous articles in this regard are:

(1) Consolidated FDI policy of India 2012 by DIPP: objectives,

(2) Consolidated FDI policy of India 2012 by DIPP: definitions,

(3) Consolidated FDI policy of India 2012 by DIPP: general provisions,

(4) FDI in limited liability partnerships (LLPs) in India 2012,

(5) Permissible direct and indirect foreign investment in an Indian company,

(6) Foreign investment promotion board (FIPB) and FDI policy of India 2012,

(7) Prohibited sectors under the consolidated FDI policy of India 2012,

(8) FDI in agriculture and animal husbandry under consolidated FDI policy of India 2012,

(9) FDI in mining sector of India under consolidated FDI policy of India 2012,

(10) FDI in petroleum and natural gas sector of India under consolidated FDI policy of India 2012

(11) FDI in micro and small enterprises (MSEs) sector of India under consolidated FDI policy of India 2012

(12) FDI in defence sector of India under consolidated FDI policy of India 2012

(13) FDI in broadcasting sector of India under consolidated FDI policy of India 2012

(14) FDI in print media sector of India under consolidated FDI policy of India 2012

In this article Perry4Law and Perry4Law Techno Legal Base (PTLB) would discuss the FDI in civil aviation sector of India under consolidated FDI policy of India 2012.

The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services / Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions.

For the purposes of the Civil Aviation sector:

(i) Airport means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934;

(ii) Aerodrome means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or pertaining thereto;

(iii) Air transport service means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights;

(iv) Air Transport Undertaking means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward;

(v) Aircraft component means any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment;

(vi) Helicopter means a heavier-than -air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis;

(vii) Scheduled air transport service means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public;

(viii) Non-Scheduled Air Transport service means any service which is not a scheduled air transport service and will include Cargo airlines;

(ix) Cargo airlines would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation;

(x) Seaplane means an aeroplane capable normally of taking off from and alighting solely on water;

(xi) Ground Handling means (i) ramp handling , (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling.

FDI in Airports is allowed in the following categories:

(a) Greenfield projects: FDI is allowed up to 100% through automatic route.

(b) Existing projects: FDI is allowed upto 100% where FDI upto 74% is allowed through automatic route and beyond 74% FDI is allowed through government approval route.

Regarding Air Transport Services:

(a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air Transport Services, helicopter and seaplane services.

(b) No foreign airlines would be allowed to participate directly or indirectly in the equity of an Air Transport Undertaking engaged in operating Scheduled and Non-Scheduled Air Transport Services except Cargo airlines.

(c) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services.

FDI in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline is allowed upto 49% (100% for NRIs) through automatic route. FDI in Non-Scheduled Air Transport Service is allowed upto 74% (100% for NRIs) where upto 49% is allowed through automatic route and beyond 49% and upto 74% through government approval route.

FDI in Helicopter services/seaplane services requiring DGCA approval is allowed upto 100% through automatic route.

Other services under Civil Aviation sector are as follows:

(1) FDI in Ground Handling Services subject to sectoral regulations and security clearance is allowed upto 74% (100% for NRIs) where upto 46% can be through automatic route and beyond 49% but upto 74% can be made through government approval route.

(2) FDI in Maintenance and Repair organizations; flying training institutes; and technical training institutions is allowed upto 100% through automatic approval route.