India, currently the world's fastest-growing civil aviation market, could see a 13th player giving competition to the existing carriers such as IndiGo, Air India, Jet Airways and SpiceJet. Qatar Airways, the national carrier of Arab nation Qatar, is planning to enter India via a fully-owned airline.
If the proposals submitted by Qatar Airways goes through, it will be first success for India ever since it relaxed FDI norms in civil avaition last June.
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"We will have a 100% owned domestic carrier in India that will belong to both QR (Qatar Airways) and our state investment arm as India has now allowed foreign investment in domestic carriers within India. We will soon be making an application to that effect," Qatar Airways CEO Akbar Al Baker said at the ITB Berlin travel show on Wednesday.
The Doha-headquartered airlines will have 49 percent stake while the balance will be held by the Qatar government's investment arm, the Qatar Investment Authority (QIA).
The swiftness of the Gulf carrier's likely offer came as a surprise to Indian civil aviation authorities. "I did not expect this (so soon)," Rajiv Nayan Choubey, civil aviation secretary said on Wednesday. "We will await for the application and will process it as per government policy," he added.
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India initiated a slew of FDI reforms last June spanning defence, civil aviation and other sectors.
The specific provisions of civil avaition read: "As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service.
"It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route.
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"However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy."
India's aviation market is thriving and growing at an exponential rate. Passenger traffic volume data released by the civil aviation regulatory showed that the sector posted 25 percent growth in January, 23 percent in December and 22.45 percent, year-on-year.
India is projected to replace UK as the third-largest aviation market by 2026.
Currently, a couple of Indian carriers have foreign investment -- Abu Dhabi's Etihad has a 24 percent stake in Jet Airways, Tata Group holds 51 percent stake in Vistara and AirAsia India each, with Singapore Airlines and AirAsia Berhad having the remaining 49 percent in them respectively.
Aviation stocks were trading in a narrow range on Thursday on the BSE. Interglobe Aviation, which owns budget carrier IndiGo, was up 0.08 percent at Rs 880, SpiceJet was trading 6.46 percent higher 82 and Jet Airways was trading at Rs 452, up 0.42 percent.
AirAsia India, Vistara, Air India and Go Air are not listed on stock exchanges.