The Indian government has decided to allow full ownership of the country's airports as part of a broader liberalisation drive aimed at boosting foreign capital flows.
Government approvals are no longer required for investments in brownfield airport projects, the Prime Minister’s office said in a statement, adding that such investments aren't capped anymore. FDI beyond 74 percent of ownership so far had to be greenlighted by Delhi.
The government said the move is designed to help modernise existing airports. Most of them are currently owned by the state-run Airports Authority of India (AAI). However, four of the country's major international airports belong to the GMR Group and GVK Group, two local conglomerates. GMR operates hubs in Delhi and Hyderabad airports while GVK runs Mumbai and Bengaluru airports.
The decision comes after a first round of policy reforms last November enabled full foreign ownership of greenfield projects.
India, the ninth-largest civil aviation market in the world, is likely to become the third-largest by 2020, the Ministry of Finance states on its PPP unit’s website. It is expected that by 2017, passenger traffic will touch 269 million, 209 million of which will be domestic. Freight traffic is forecast to hit 11.4 million tonnes by 2032.
AAI is planning to spend $1.3 billion on non-metro projects over the five years to 2017, mainly focusing on the modernisation and upgrades of airports. In the last five years, AAI has developed and upgraded over 23 hubs. More than 30 airport development projects are currently under progress across Northeast India.
At the same time, foreign investment beyond 49 percent in airlines is now allowed, pending government approval.
The Modi government has also eased FDI rules for another eight sectors including defence, broadcasting carriage services, food products trading, pharmaceutical and private security agencies.