FIIs may be out of aviation FDI cap

In a move that paves the way for greater foreign investment in domestic airline companies, RBI has said foreign institutional investors (FIIs) can pick up stake in these airlines beyond the sectoral FDI cap of 49% through secondary market purchases. The apex bank’s view is that the sectoral cap of 49% is not stipulated as a composite limit. While FII investment is distinct from FDI in the foreign investment policy, secondary market purchase was a grey area that has now become clear.

RBI is of the opinion that investment through GDRs should be within the overall FDI limit. Secondary market purchases by NRIs and erstwhile overseas corporate bodies (OCBs) will also be within the 49% FDI limit. Such investments will be on a par with secondary market purchases by foreign banks, companies and nationals.

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