Press Information Bureau

Government of India

Ministry of Finance

16-March-2012 14:10 IST

ECB for Working Capital Allowed in Civil Aviation

Direct Import of ATF by Indian Carrierspermitted

49% Participation in Equity by Foreign Airlines Under Consideration

Presenting the General Budget 2012-13 in LokSabhatoday, the Union Finance Minister, ShriPranab Mukherjee proposed permission of External Commercial Borrowings (ECB) for working capital requirement of the airline industry for one year subject to total ceiling of US $ 1 billion. The Finance Minister said that this was to address the immediate financing concerns of the Civil Aviation sector, which is facing financial crisis.

In order to reduce the cost of Aviation Turbine Fuel (ATF), which largely contributes to the high operating cost of the civil aviation sector, the Finance Minister stated that the Government has permitted direct import of ATF by Indian Carriers, as actual users.

Shri Mukherjee informed that a proposal to allow 49% equity participation by foreign airlines engaged in operation of scheduled in non-scheduled air transport services is under active consideration of the Government.

DSM/MV/LMP/32

External commercial borrowing for airline working capital permitted, with direct ATF import allowed and foreign equity under review. Permission was proposed to permit external commercial borrowings for short term working capital needs of the airline industry subject to an aggregate ceiling; the Government authorized direct import of Aviation Turbine Fuel (ATF) by Indian carriers as actual users; and a proposal to allow foreign airline equity participation up to a specified threshold in scheduled and non scheduled carriers is under active consideration.