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Cabinet defers FDI in aviation, airlines stocks hit

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49 per cent.

The Cabinet has deferred a decision on foreign direct investment (FDI) in aviation sector, which could allow foreign airlines to buy stake in local carriers.

The issue may be taken up by the cabinet next week, Civil Aviation Minister Ajit Singh said on Thursday.

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49 per cent.

Shares of aviation stocks reversed their early gains after the news. A positive decision would have paved the way for a lifeline for struggling Kingfisher Airlines.

Kingfisher Airlines shares fell 4 per cent in afternoon trade before cutting the losses a little to trade 1.51 per cent lower on the Bombay Stock Exchange at 3.11 pm.

At the same time, Jet Airways was trading 2.23 per cent lower at Rs 350.50. SpiceJet was trading similarly, down 3.1 per cent at Rs 28.10.

With agency inputs