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Govt considering 100 percent FDI in airports

    New Delhi: The Government is actively considering a proposal to allow 100 per cent Foreign Direct Investment (FDI) in airports through the automatic route, doing away with clearances by the Foreign Investment Promotion Board (FIPB). The Commerce Ministry has suggested a slew of FDI policy changes and the Group of Ministers headed by Agriculture Minister Sharad Pawar is evaluating the pros and cons before allowing 100 per cent foreign participation in development of airports through the automatic route. Currently 100 per cent foreign participation in the sector is allowed but there is a sectoral cap of 74 per cent. If the foreign company wants to invest more than 74 per cent it has to apply for FIPB approval. The Commerce Ministry wants this to be simplified by doing away with the FIPB route, as the activities in the airports sector are regulated by the Civil Aviation Ministry and the DGCA, official sources said. The move would give a boost to the proposed upgradation and modernisation programme announced by the Aviation Ministry for 35 non-metro airports and the greenfield airports to be set up in consultation with the states.

    In a presentation made last week to Members of the Parliamentary Committee on Civil Aviation, the Airports Authority of India (AAI) had pointed out that the country's civil aviation sector was witnessing a boom in terms of traffic growth. In contrast to 2003-04, 2004-05 witnessed a 11.9 percent growth in aircraft movements, 21.5 percent growth in passengers and 19.8 percent growth in cargo. As per traffic forecasts, these trends are likely to continue over the years to come. The next two years should see a 9.0 percent growth in international aircraft movements, and 10 percent growth in domestic aircraft movements; 10 percent growth in international passengers and 15 percent growth in domestic passengers; 12 percent growth in international cargo and 15 percent growth in domestic cargo. The AAI has taken up the task of infrastructure development of airports to meet the unprecedented surge in demand meeting the requirements of the unprecedented growth in air traffic as well as higher expectations of customers. While the evaluation of technical bids for Mumbai and Delhi airports is in process, the AAI has drawn action plan to meet the urgent needs at these airports. Recently six additional bays have been added to the Delhi Airport and work is on for 19 bays to be completed by October 2006. Eight bays have been added to the Mumbai Airport and work is on for 18 more bays to be completed by June 2006. The AAI have also initiated up gradation work at Chennai and Kolkata Airports. Amongst other works being taken up at Chennai Airport, additional checking counters are being provided in both domestic and international departure terminals and construction of a new international arrival terminal and its integration with the new international departure terminal is in progress. In Kolkata a new international departure terminal is proposed to be constructed at a tentative cost of Rs.215 crores besides other developmental works.

     A total number of 143 additional bays are planned or being constructed at 45 Airports. In order to encourage the airline operators to use Airports other than six busy airports i.e. Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad the night parking charges between 10 p.m. to 6 a.m. have been reduced to 50 percent of the existing parking charges for all airline operators at AAI Airports from January 1, 2006. It is estimated that an expenditure of Rs. 5500 crores is to be incurred for the development of Terminal Buildings and Air Side Works at these Airports. A Credit Rating Agency, a Financial Advisor- cum-Lead Arranger and Arrangers for raising the required funds for funding the projects relating to the airports have been appointed. A task force has been constituted under the chairmanship of Member Planning Commission for finalization of the financial model and the report is expected by January 2006.
-Jan 10,  2006

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