FDI poses potential threat to national security, says Intelligence report

Read more at: http://indiatoday.intoday.in/story/fdi-poses-potential-threat-to-national-securitysays-intelligence-report/1/224547.html "Foreign Direct Investment (FDI) in aviation and telecom sectors is potential threat to national security," a secret paper submitted by Joint Intelligence Committee (JIC) to Union Home Ministry in September 2008 stated. The Union government has overlooked the paper while approving FDI and framing its rules. The secret paper, a copy of which is with India Today, draws attention to threats associated with foreign participation in the economy. It categorically mentions that in India the only guideline, which touches upon security aspects, is the FEMA notification issued in 2000 that prohibits FDI from Pakistan and Bangladesh. "No other country is mentioned." Security experts believe that China is a bigger threat than Pakistan. The paper broadly focuses on national security threats arising out of FDI inflow, mergers and acquisitions, Sovereign Wealth Funds (SWF) and public private partnerships. It takes into account references from PMO on "FDI in sensitive areas and industries" and "enhancement of FDI limit in telecom sector". The paper mentions that flow of unverifiable investments from tax havens like Mauritius, Cyprus, Cayman Islands and from criminal groups operating from outside pose a security threat to the economy. "A Pakistani company can set up business in Dubai and the Dubai-based company can invest in India through a tax haven and can engage itself in infrastructure development for a private company. Foreign investment from countries such as China, Hong Kong, Macau, Taiwan, Pakistan, Bangladesh, Afghanistan could threaten our security interests as the entities from these countries could be manipulated." The panel of experts in the JIC named two foreign companies, Great Wall Airlines and Saudi Telecom, to bolster their arguement. "China's state owned China Great Wall Industry Corporation (CGWIC) holds 51 per cent share in the airline company, Great Wall Airlines. The company has plans to apply for cargo operations to Chennai and Mumbai. CGWIC has very close links with PLA. It focuses on commercial development of space technology and the US government since 1991 has imposed sanctions several times for missile proliferation. The Chinese take keen interests in monitoring our nuclear establishments and missile and satellite launch facilities on east coast." On telecom sector it warns that allotment of preferential shares to a foreign entity in a company in sensitive sectors may result in controlling stakes on a future date. "Saudi Telecom acquired 25 per cent stakes in Maxis Communications. Maxis own (74 per cent) operational stake in India

through its Chennai-based Aircel Unit. Aircel operates in certain sensitive locations (Assam, Jammu and Kashmir, West Bengal and North-East). Aircel has also applied for pan-India license. By obtaining a majority stake Saudi Telecom would indirectly obtain controlling rights over Aircel operations." The paper was prepared on the basis of inputs received from agencies, departments and interministerial discussions. It was discussed at the meeting of Committee of Secretaries (COS) on January 31, 2007. It also incorporates SEBI guidelines issued on October 25, 2007 with regard to Foreign Institutional Investors. The BJP says it would rake up the issue of national security in the Parliament when FDI bill will be introduced in the winter session in November. "This is a very serious issue. The government should take a note of that. There are several other reports regarding the activities of Indian Mujahidin and infiltration from Bangladesh etc but the government is not serious on it," BJP spokesperson Prakash Javadekar says.

Read more at: http://indiatoday.intoday.in/story/fdi-poses-potential-threat-to-national-securitysays-intelligence-report/1/224547.html

No applicants for FDI in aviation yet, air traffic falling: Ajit Singh
New Delhi: Civil Aviation Minister Ajit Singh today expressed concern over shrinkage in air passenger traffic numbers in the last three months but hoped that the buoyancy in the sector would lead to a spike in the long-run. In the past three months, the traffic numbers have fallen. Following the global economic downturn, there were worries about a downturn in the Indian economy. There were estimations about a fall in GDP growth and there were issues relating to high costs. And airlines and the hospitality industry are the first to suffer from this, Singh told the Economic Editors conference here. We hope that in the long-run the traffic will increase. It is bound to increase, he said. Official figures have shown that in July-September, the air traffic has shrunk month-over-month by 9-11 percent. However, between January-August this year, international passenger traffic grew by 15 percent over the same period

last year and the number of passengers carried rose marginally from 39.63 million in 2011 to 39.82 million this year.

Civil Aviation Minister Ajit Singh. PTI The overall losses of all Indian carriers totalled about Rs 10,000 crore, he said, adding, half of their debt related to aircraft purchase apart from massive working capital loans. Giving a brief on various aspects of the civil aviation sector, the Minister said the government had undertaken a series of initiatives to further the growth of the sector. In order to promote regional air connectivity, he said the government had approved creation of 15 greenfield airports and work on three of them at Mopa (Goa), Navi Mumbai and Kannur is likely to begin by the end of this fiscal. A total of Rs 24,132 crore would be made available for airport development in the 12th Plan period, including Rs 17,500 crore investment in the central sector. To promote connectivity to Tier-II and Tier-III cities, he said changes were being made in the Route Dispersal Guidelines, which make it mandatory for all Indian airlines to operate to socially-important but financially unviable routes in the north-east, Jammu and Kashmir and A&N Islands. Singh said the Aircraft Acquisition Policy was also being amended to nudge the Indian carriers to buy smaller planes to operate to smaller cities. Singh said, We have engaged consultants to help formulate (changes in the route dispersal guidelines) and their report is expected in two months.

Government was also having a re-look at the Aircraft Acquisition Policy, under which Indian carriers would be nudged to acquire smaller planes to fly to smaller cities, we cant mandate them to do that. They would also be asked to submit detailed business plans to help us understand how many planes they would require, Singh said. Other measures initiated by the government include allowing foreign airlines to invest FDI upto 49 percent in Indian carriers, allowing airlines to directly import jet fuel, seeking rationalisation of taxes on it, modernising a large number of airports in metros and non-metros, initiating steps to establish a Civil Aviation Authority, a separate Air Accident Bureau and Civil Aviation Security Force. Asked about the response of liberalising FDI in the sector so far, Singh said no one (foreign airline) has approached yet. It is an enabling provision and part of a long-term policy. Aviation business in highly complicated. Let us see what happens. Maintaining that there was a very low level of investment in aviation due to the high risk factor, he said substantial FDI could only come if foreign carriers were permitted to invest. The purpose is to bring in strategic foreign investors, apart from expertise and experience. Regarding high ATF prices which account for 45-55 percent of an airlines total operational cost, he said Civil Aviation Ministry was in talks with other concerned Ministries to declare aviation turbine fuel as a notified good and to bring its pricing under the ambit of Petroleum and Natural Gas Regulatory Board. Efforts were also governments, which imposed five-30 percent sales tax on ATF, which would bring down its prices, the Minister said.

FDI in Aviation won't serve as a game changer for airlines industry

Rajesh Naidu, ET Bureau Sep 20, 2012, 06.40PM IST Tags:

Kingfisher Airlines| Jet Airways| indian airlines| FDI in aviation| FDI

(FDI in aviation would not) MUMBAI: The allowing of foreign airlines companies to buy into minority stake in Indian airlines companies would not serve as a game changer for airlines industry as it would not address the systemic and operational challenges of the industry. One of the biggest operational challenges in India's strongly cyclical airlines industry is the inconsistency in taxes of aviation turbine fuel among various states.

SpiceJet, GoAir to gain from FDI in aviation

TNN | Sep 14, 2012, 12.40AM IST NEW DELHI: The government's move to finally clear FDI by foreign airlines into desi carriers is being seen as the most critical first step towards making Indian aviation a viable sector. Both top airline and aviation ministry officials say that the country's cost-unfriendly character towards the sector will need to change to attract money and expertise of foreign airlines or to make big foreign airlines launch new startups here with Indian partners. "It may not immediately change things for Indian carriers," said Centre for Asia Pacific Aviation (CAPA) India head Kapil Kaul. Issues like prohibitive jet fuel pricing and airport charges would need to be relooked to make investing in an Indian carrier profitable for anyone. Despite the roadblocks, CAPA and the industry insiders feel that SpiceJet and GoAir will be the first gainers from the move. "This policy change would give Kingfisher an outside chance for survival. But it needs to change a number of things before that. IndiGo and Jet are already close or over the 49% foreign ownership that is talked about," Kaul said. Kingfisher chief Vijay Mallya, who is banking on FDI to save the airline, claimed he was unaware of the government's latest move for clearing FDI. "I am in a meeting in Europe and have not heard of anything (on FDI)," Mallya said. His crisis-ridden airline has debt of over Rs 8,500 crore and has not paid salary for even March to many employees. While Kingfisher's survival is linked to this move, UPA's long delay on FDI in aviation had made even foreign airlines switch off. The CEO of an Indian carrier, which is a prime contender for FDI, said: "Foreign airlines got tired of the kabhi haan, kabhi naa thing on FDI. We are in talks but they did not get a due diligence done as that costs money and the foreign airline wants to get it done at a time when they can actually put money."