New Delhi: In a bid to safeguard interests of ailing aviation sector, a Group of Ministers headed by Finance Minister Pranab Mukherjee slated to meet on February 9 to give final touches on allowing Foreign Direct Investment (FDI) in Indian carriers has advocated for 49 percent investment by foreign airlines.

According to Confederation of Indian Industry (CII), there is an immediate need of at least 49 percent foreign investment to meet the desired requirements as well as to strengthen the ailing airlines.

CII also believes that allowing FDI would help in restructuring the Indian carriers financially which is one of the factors which would help the industry to survive the current financial crisis.

The GoM meet will also decide on the investment cap by foreign airlines for buying equity in Indian carriers.

The GoM is also likely to take a decision on allowing Indian airlines directly import aviation turbine fuel to get some breather from the high sales tax regime imposed by various state governments.

At present foreign investment of up to 49 percent is permitted in the aviation sector, apart from 100 percent in MRO (maintenance, repair and overhaul), airports, helicopter and sea-plane operations, but foreign carriers are not allowed to invest.

CII has also said that servicing an aircraft in India entails tax of 12.36 percent whereas in other countries no such levies are collected from airlines. It also added that the import of spares involves custom duties of 25.4 percent in India.

Civil Aviation Minister Ajit Singh, after his meeting with Finance Minister Pranab Mukherjee on January 17, had said that he had discussed the issue with him and that he had expressed his agreement to it.

Earlier, the Civil Aviation Ministry had suggested 24 percent, while the Department of Industrial Policy and Promotion (DIPP) had recommended 26 percent.