Mamata Banerjee, chief minister of West Bengal and an important ally of the United Progressive Allaince government has given go-ahead to foreign direct investment in the aviation sector, according to a source in her government in Kolkata.
The UPA government is likely to take a final call on Friday on the issue of allowing foreign airlines to invest up to 49 per cent stake in the Indian carriers.
Most of the Indian air carriers are cash-starved and in dire need of fresh business openings.
Commerce and Industry Minister Anand Sharma told reporters on Thursday that the issue of FDI in aviation is listed on the agenda of the Cabinet Committee on Economic Affairs (CCEA) which will meet on Friday.
Mamata was completely against the move as industry experts have been claiming that the FDI in aviation by foreign airlines would hurt Air India. The fresh injection of liquidity is going to strengthen financial capability of the private sector.
Some experts feel that Mamata was opposing the move because her arch rival the Communist Party of India (Marxist) is vehemently opposing FDI in both retail and aviation. Till today, Mamata didn't want to give away the working class issue to her rivals on a platter.
At present, India allows foreign investors to invest in aviation sectors but doesn't allow foreign carriers to invest in them.
For obvious reasons, Jet airways and Indigo airlines are opposed to foreign investment.
Some critics are seeing the move of the government as an attempt to bail out Kingfisher Airlines, which is facing serious crisis with debt burden of Rs 7,000 crore (Rs 70 billion). Media reports suggest that the government may tweak rules to help the ailing airline.
It is said that Emirates and British Airways are keen to invest in Indian carriers who are having combined debt of over Rs 50,000 crore (Rs 500 billion) and almost equal amount of accumulated losses.
"The surprising thing is what made Mamata agree on FDI in aviation now, after opposing it for so many years?" asks a leader from West Bengal who thinks that in the state the Left parties have got the political edge on the issue due to Mamata's sudden change of heart on the issue.