Mumbai and Delhi airports to remain under Indian control

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The new Indian government has reduced the stake on offer to foreign companies as part of aviation measures announced this week

The new Indian government has reduced the stake in Mumbai and Delhi airports on offer to foreign investors as part of a raft of aviation measures announced over the past week. Overseas firms will be allowed to own up to 49% of shares in India's two busiest airports, with the government retaining a 26% stake.

The previous Hindu nationalist administration had agreed to allow foreign majority stakes after studies showed the facilities were far below international standards. But civil aviation minister Praful Patel said that a minimum 51% stake should remain in Indian hands, and that expressions of interest should now be submitted by July 20.

Also included in the minister's announcement was the decision to press ahead with a multi-billion dollar aircraft purchase plan for state-owned carriers Air India and Indian airways, postponed by the former government. The new administration revealed its intention to negotiate a lower price for the acquisition of 43 Airbus airplanes for Indian Airlines, as well as 18 Boeing and a further 10 Airbus for Air India. Patel said that the carriers urgently need new aircraft, as Indian Airlines' last major purchase was in 1989.

Meanwhile, Air India has proposed the creation of a low-cost carrier serving south-east Asian and Gulf routes, except Saudi Arabia. The new airline, A-I Charters, will offer 25% lower fares than Air India and is scheduled to be operational by April 2005. Air India has projected profits of Rs2.64bn ($58m) by the end of 2006.