Magic Air fate uncertain

Cabinet refers issue of PIOs in aviation to GoM

BY A CORRESPONDENT
23rd January 2006

Magic Air, a proposed airline promoted by Nira Radia will have to wait a while before takeoff. Magic Air's February 2005 application to start an airline met with roadblocks after it came to light that current norms do not allow Persons of Indian Origin (PIOs) to own airlines in India. However, NRIs are permitted to do so. Nira Radia is a person of Indian origin.

On Thursday, the Union cabinet referred the issue of PIOs investing in domestic aviation to the Group of Ministers (GoM) on FDI headed by Union Agriculture minister Sharad Pawar.

Other members of the GoM are civil aviation minister Praful Patel, Finance Minister P Chidambaram, Commerce Minister Kamal Nath, Mines Minister Sis Ram Ola and Coal Minister Dasari Narayan Rao and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Said Praful Patel: "The GoM on FDI will review the entire issue of PIO investment in domestic airlines and will come back to the Cabinet with its recommendations," Civil Aviation Minister Praful Patel said.

There has been a demand to treat NRIs and PIOs at par on issues on foreign direct investment. However, some ministries feel that in case of liabilities, it will be difficult to pin accountability on PIOs.