On September 14, 2012, the central government announced that foreign airlines would now be allowed to invest up to 49% in domestic airlines. Under the policy announced by the government, the ceiling of 49% foreign investment includes foreign direct investment and foreign institutional investment. Prior to investing in a domestic airline, foreign airlines would have to take approval of the Foreign Investment Promotion Board. Additionally, the applicant will also be required to seek security clearance from the Home Ministry. In 2000, the government first permitted foreign direct investment up to 40% in the domestic airline sector. However, no foreign airline was allowed to invest either directly or indirectly in the domestic airlines industry. Non Resident Indians were permitted to invest up to 100%. Furthermore, the foreign investor was required to take prior approval of the government before making the investment. Subsequently, the central government eased the foreign investment norms in this sector. As of April 2012, foreign direct investment is permitted in all civil aviation sectors. The Civil Aviation sector in India includes airports, scheduled and non-scheduled domestic passenger airlines, helicopter services / seaplane services, ground handling Services, maintenance and repair organizations, flying training institutes, and technical training institutions. Foreign airlines were not permitted to invest either directly or indirectly in domestic passenger airlines. However, they are permitted to invest in cargo companies and helicopter companies. Investment by foreign airlines in the domestic airline industry has been a long standing demand of domestic airlines. According to the Report of the Working Group on Civil Aviation for formulation of twelfth five year plan (2012-17), India is currently the 9th largest civil aviation market in the world. Between 2008 and 2011, passenger traffic (domestic and international) and freight traffic increased by a compounded annual growth rate of 7% and 11% respectively. The traffic growth (passenger and freight) at 18% exceeded the growth rate seen in China (9.7%) and Brazil (7.5%), and was higher than the global growth rate of 3.8%. According to the Centre for Civil Aviation, until February 2012, India had the second highest domestic air traffic growth. However, due to the crisis faced by Air India and Kingfisher, the passenger numbers have declined in June-July 2012. India was the only major domestic market that failed to show an expansion in demand in June 2012, as compared to the previous year. Despite the rapid growth, the financial performance of airlines in India has been poor. According to the Report of the Working Group on Civil Aviation, the industry is expected to have a debt burden of approximately USD 20 billion in 2011-2012. According to the same report, during the period 2007-2010 India's airlines suffered an accumulated loss of Rs 26,000 crores. According to the government, investment by foreign airlines shall bring in the much needed funds and expertise required by the domestic industry. However, as per to some analysts, foreign investment alone cannot solve the problem. According to them, the major cost impacting the growth of the industry is the high cost of Aviation Turbine Fuel. As per the press release by the government on June 6, 2012, ATF accounts for 40% of the operating cost of Indian carriers. In comparison, fuel constitutes only 20% of the cost for international carriers. ATF in India is priced, on an average, 60% higher than international prices. This is due to the high rate of taxation imposed on ATF by some states. In most states, the VAT on ATF is around 25-30%.
In April last year the government had notified the Information Technology (Intermediary Guidelines) Rules, 2011 (IT Rules) under the Information Technology Act, 2000. The IT Rules are listed for discussion in Rajya Sabha today in pursuance of a motion moved by Mr. P. Rajeeve [CPI(M)]. The motion seeks to annul these Rules and recommends that Lok Sabha also concur with the motion. The IT Rules require intermediaries (internet service providers, blogging sites like Blogger and Wordpress, and cyber cafés) to take certain action. Intermediaries are required to enter into agreements with their users prohibiting publication of certain content. Content that cannot be published includes anything that is ‘harmful to minors in any way’, ‘blasphemous’, ‘encouraging money laundering’ etc. This raises three issues. Some of the categories of content prohibited for publication are ambiguous and undefined. For instance, ‘grossly harmful’ and ‘blasphemous’ content are not defined. Publication of certain content prohibited under the IT Rules, is currently not an offences under other laws. Their publication is in fact allowed in other forms of media, such as newspapers. Newspapers are bound by Press Council Norms. These Norms do not prohibit publication of all the content specified under the IT Rules. For instance, while these Norms require newspapers to show respect to all religions and their gods, they do not prohibit publication of blasphemy. However, under the IT Rules blasphemy is prohibited. This might lead to a situation, where articles that may be published in newspapers legally, may not be reproduced on the internet for example in the e-paper or on the newspaper’s website. Prohibition of publication of certain content under the IT Rules may also violate the right to freedom of speech. Under Article 19(2) of the Constitution restrictions on the right to freedom of speech may be imposed in the interest of the State’s sovereignty, integrity, security and friendly relations with other States, public order, morality, decency, contempt of court, and for protection against defamation. The content prohibited under the IT Rules may not meet the requirement of Article 19(2). This may impinge on the right to freedom of speech and expression. Further, anyone can complain against such content to the intermediary. The intermediary is required to remove content if it falls within the description specified in the IT Rules. In the event the intermediary decides not to remove the content, it may be held liable. This could lead to a situation where, in order to minimise the risk of liability, the intermediary may block more content than it is required. This may imply adverse consequences for freedom of expression on the internet. PRS’s detailed analysis of the IT Rules may be accessed here.
