The Hindu Business Line : Govt yet to decide on Virgin proposal

A QUESTION mark hangs over the proposed investment by Virgin Atlantic into the domestic aviation sector, as the Government is yet to take a firm view on whether such investment is permissible.

"The Government will have to take a view on the proposed investment. Any individual can invest, but we will have to see whether it (Virgin's investment) is a surrogate investment. One thing is clear, that the present policy does not allow foreign airlines to invest in the domestic aviation sector," the Secretary, Civil Aviation, Mr Ajay Prasad, said on the sidelines of an aviation conference.

The Chairman of the Virgin Group, Sir Richard Branson, had said on Saturday that the group was in talks with one or two existing airlines and also with some who plan to set up shop soon. The Virgin Group, he had noted, would look at picking up a stake of about 25-49 per cent.

Currently, the Government has capped foreign direct investment in the domestic aviation sector at 49 per cent, but has not permitted foreign airlines to have an equity stake, either directly or indirectly, in the project.

Senior Government officials present at the conference, however, felt that it would be "extremely" difficult to allow Mr Branson to invest in the aviation sector.

"Mr Branson is so closely related to Virgin Atlantic Airways that it may be difficult to differentiate between the investment being made by the group and by him personally," a senior Government said.

The Government, he said, was not "aware" of any moves being made by the group to acquire a stake in the domestic aviation sector.

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