India's Intelligence Bureau (IB) has flagged its concerns over proposed changes to foreign investment in the civil aviation industry, reports Business World. An anonymous IB source told the news site that aviation is a "highly sensitive sector" and should not be opened up to 100% foreign direct investment and control.
The concerns were raised during a meeting last month between the IB and senior civil aviation officials. India has recently overhauled its foreign investment rules and approval infrastructure, in an attempt to encourage greater investment in the country. In 2015-2016, foreign direct investment across all sectors in India increased 29% to USD40 billion.
Regarding foreign investment in the aviation industry, local carriers IndiGo Airlines (6E, Delhi International) and SpiceJet (SG, Delhi International) have also spoken out against the proposed changes, according to The Times of India.
Under new rules which came into effect last month, foreign investors – excluding foreign airlines – can own up to 100% of a local carrier, but an air operator's permit can only be held by a company which is substantially owned and controlled by Indian nationals. Essentially, this means that if a foreign investor controls more than 50% of a domestic airline, the air operator's permit is no longer valid.
"[T]his sectoral norm needs to be amended," said sources quoted in the Times of India.
But security officials are concerned that further relaxing the rules poses a security threat. According to Business World, the IB believes that the existing rule should stand, and that substantial control should remain with Indian nationals.
The source said that another meeting regarding the matter would be held this week.
