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FDI in Civil Aviation Sector (Airports, etc) in India

A. Airports

% of Equity/ FDI Cap
Entry Route
(a) Greenfield projects
(b) Existing projects

B. Air Transport Services

% of Equity/ FDI Cap
Entry Route
(1) (a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline
(b) Regional Air Transport Service
(100% for NRIs)

(2) Non-Scheduled Air Transport Service
(3) Helicopter services/seaplane services requiring DGCA approval

C. Other services under Civil Aviation sector

% of Equity/ FDI Cap
Entry Route
(1)Ground Handling Services subject to sectoral regulations and security clearance
(2)Maintenance and Repair organizations; flying training institutes; and technical training institutions.

Important Definitions: The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services/Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions.

For the purposes of the Civil Aviation sector:
(i) “Airport” means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934;
(ii) “Aerodrome” means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or pertaining thereto;
(iii) “Air transport service” means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights;
(iv) “Air Transport Undertaking” means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward;
(v) “Aircraft component” means any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment;
(vi) “Helicopter” means a heavier-than-air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis;
(vii) “Scheduled air transport service” means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public;
(viii) “Non-Scheduled air transport service” means any service which is not a scheduled air transport service and will include Cargo airlines;
(ix) “Cargo airlines” would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation;
(x) “Seaplane” means an aeroplane capable normally of taking off from and alighting solely on water;
(xi) “Ground Handling” means (i) ramp handling, (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling.

Other Conditions

(a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air Transport Services, helicopter and seaplane services.

(b) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services, as per the limits and entry routes mentioned above.

(c) Foreign airlines are also allowed to invest in the capital of Indian companies, operating scheduled and nonscheduled air transport services, up to the limit of 49% of their paid-up capital. Such investment would be subject to the following conditions:
(i) It would be made under the Government approval route.
(ii) The 49% limit will subsume FDI and FII/FPI investment.
(iii) The investments so made would need to comply with the relevant regulations of SEBI, such as the Issue of Capital and Disclosure Requirements (ICDR) Regulations/ Substantial Acquisition of Shares and Takeovers (SAST) Regulations, as well as other applicable rules and regulations.
(iv) A Scheduled Operator's Permit can be granted only to a company:
a) that is registered and has its principal place of business within India;
b) the Chairman and at least two-thirds of the Directors of which are citizens of India; and
c) the substantial ownership and effective control of which is vested in Indian nationals.
(v) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport
services, as a result of such investment shall be cleared from security view point before deployment;
(vi) All technical equipment that might be imported into India as a result of such investment shall require clearance from the relevant authority in the Ministry of Civil Aviation.

Note: (i) The FDI limits/entry routes, mentioned at paragraph B(1) and B(2) above, are applicable in the situation where there is no investment by foreign airlines.
(ii) The dispensation for NRIs regarding FDI up to 100% will also continue in respect of the investment regime specified at clause(ii) of para (c) under "Other Conditions" mentioned above.
(iii) The para (c) under "Other Conditions" mentioned above is not applicable to M/s Air India Limited

Extra Notes for Readers
(1) FDI in Civil Aviation Sector (Airports, etc) in India is prescribed in Clause 5.2.9 of the Consolidated FDI Policy Circular of 2016 (D/o IPP F. No. 5(1)/2016-FC-1 Dated the June 07, 2016) issued by Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India.
(2) Clause 5.2.9 was modified by Press Note No. 5 of 2016 Series(File No. 5/4/2016-FC-I dated 24th June 2016) issued by DIPP - link
(3) RBI FEMA Notification G.S.R. 1089(E) dt. 25th November, 2016 - link 
(4) Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eighteenth Amendment) Regulations, 2016 (7th Dec, 2016) - link

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