Allowing FDI in aviation a welcome step: Ajay Prasad

Ajay Prasad, former secretary, aviation ministry, says that getting FDI nod for Indian domestic sector was a much awaited decision and is a good move that foreign airlines can now participate in India aviation space.

Below is the edited transcript of his interview to CNBC-TV18.

Q: There is news that FDI in aviation and multi retail has been cleared. What is your view?

A: The proposal was due over a period of time and there has been artificial restriction for many years, that foreign airline cannot participate in the Indian domestic sector, which was unnecessary in the present context. So, I am happy that this has been removed.

Q: Do you believe that we will see many takers for Indian carriers because we are getting a sense that necessarily may not work out because look at the kind of debt that Indian carriers especially companies like Kingfisher is sitting on, foreign carriers would not want to take on that kind of debt and also the regulatory environment in India hasn't changed. British Airways said that till the government continues to invest in Air India we don't want to be in this business in India?

A: It maybe a particular view of British Airways, but I don't mean that the moment the restriction is lifted everybody will queue up to invest in Indian domestic carriers. Any one who will invest money here will take a very hard look at the investment opportunity and debt standing, but at the same time it opens a window for some of the Indian carriers who are eyeing equity participation and it is logical that in Indian carriers it is foreign airlines who will invest rather than someone who is in some other business.

Q: Does this open a window for the government to even consider the possibility of inviting a foreign airline into the national carrier, something that was planned almost 20 years back and then got lost in politics?

A: This would be a natural corollary of this decision because the decision to disinvest in Air India is on a different considerations and the government will have to take a very different view irrespective of the fact that the foreign airlines can invest or not on the disinvestment process in Air India. But this is primarily today to either help some of the domestic private carriers, which are cash-strapped and which are looking for participation.

Q: Would it be possible for Emirates to come into India because in the past when Emirates was getting involved in other areas like for instance ground handling there were a lot of security concerns and we know that more than a British Airways or US aviation carrier it could possibly be a better option for a company like Emirates to look at India as a second hub to serve this part of the region. Will security concerns and will that part of the government support such a situation?

A: Any investor in aviation has to take necessary clearances. In aviation there are certain stipulations even for a domestic Indian company even to have directors on their board they need security clearances for their individual directors. So, there will be a process of scrutiny and any security consideration --- will certainly come into play.