Aviation stocks rally as FDI norms take effect

Aviation companies shares rallied on the bourses on Friday, gaining up to 6 per cent, after the government implemented the decision to liberalise foreign direct investment (FDI) in the aviation sector.

This would now pave the way for much-needed equity infusion into Indian carriers which are in dire need of funds for operations.

Unfazed by opposition even from its own allies, the government on Thursday went ahead implementing its decisions to allow FDI in multi-brand retail and liberalise foreign investment in aviation and broadcasting sectors.

"The Government of India has reviewed the position in this regard and decided to permit foreign airlines also to invest in capital of Indian companies operating scheduled and non-scheduled air transport services up to the limit of 49 per cent of their paid up capital," a notification by the Department of Industrial Policy and Promotion (DIPP) said.

At 2.06 pm, Kingfisher Airlines was trading 5.53 per cent higher at Rs 13.17 on the Bombay Stock Exchange. At the same time, Jet Airways was trading 1.14 per cent higher at Rs 364.10, while SpiceJet was up 2.99 per cent at Rs 37.90.

Investments in the aviation sector would be made under the government approval route and the parties need to comply with regulations of Securities and Exchange Board of India.

Earlier, no foreign airline was allowed to invest in Indian carriers directly or indirectly.

Stock markets cheered the move with the BSE Sensex trading 405.02 points higher in afternoon trade at 18,754.27.

With inputs from PTI