New Delhi: With several Airlines landing into dire straits, Union Commerce and Industry Ministry has moved a draft Cabinet note to allow 26 percent foreign direct investment (FDI) by foreign airlines in the domestic carriers.

The Ministry is likely to present the note in the cabinet soon. The government took this decision looking at the troubles faced by Kingfisher and several other companies.

According to sources, Department of Industrial Policy and Promotion (DIPP) has expressed the need for immediate infusion of funds into the private airlines for their betterment.

The Civil Aviation Ministry had earlier proposed a 24 per cent FDI to the foreign airlines. The Department of Industrial Policy and Promotion has now raised it to 26 percent.

The DIPP believes that allowing an FDI less than 26 percent would not be an attractive proposition for the foreign investors. A 26 percent FDI would enable the strategic partner to speak in policy matters of the company, and would also force the company’s board to chance certain policy decision through special proposal.

According to sources, on Tuesday evening, the proposed cabinet note was also forwarded to various ministries including Finance, Home, Civil Aviation and Law.

At present, FDI in domestic passenger airlines is allowed up to 49 percent, but foreign airlines are not entitled to this provision.

The proposed note comes at a time when numerous domestic airlines are in a financial mess. Kingfisher reported a net loss of Rs.468 crore, Jet Airlines Rs.713 crore and Spicejet Rs.240 crore for the second quarter of the current fiscal year.

JPN/Bureau