INDIA: India opens up cargo sector to FDI

In what amounts to one of the most signifi cant developments for the Indian air cargo industry, the Indian government recently changed foreign investment rules to allow foreign carriers to take up to a 74per cent stake in cargo airlines. Previously foreign direct investment (FDI) was capped at 49 per cent and international carriers were […]


In what amounts to one of the most signifi cant developments for the Indian air cargo industry, the Indian government recently changed foreign investment rules to allow foreign carriers to take up to a 74per cent stake in cargo airlines.

Previously foreign direct investment (FDI) was capped at 49 per cent and international carriers were not allowed to invest in cargo operations.

"The Cabinet decision says that no direct or indirect investment by foreign airlines will be allowed in case of scheduled, non-scheduled and chartered airlines. However, 74 per cent FDI from foreign airlines will be allowed in cargo carriers," a civil aviation ministry official was quoted as saying in a Business Standard report.

The decision has already piqued the interest of at least three global carriers – FedEx, Malaysia Airlines (MAS) and Australia-based HeavyLift Cargo Airlines – who have all reportedly approached the ministry seeking details on setting up and expanding their operations in India.

The government also approved 100 per cent FDI in maintenance, repair and overhaul (MRO) organisations, flying training institutes (FTIs) and helicopter services (up from 49 per cent).

Also, FDI in ground handling services and non-scheduled airlines has been increased to 74 per cent up from the earlier 49 per cent. However, FDI for scheduled airlines – a controversial area were the Cabinet has been divided – remains capped at 49 per cent. Th e decisions are expected to give a major boost to FDI in the aviation sector. In India, apart from Air India, which has dedicated freighter operations, Jet Airways has plans to start cargo operations in the next 18 months and Flyington Freighters and Aryan Cargo Express are also slated to start cargo services.