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Since Indian government has passed FDI decision for Aviation Industry. By which now foreign players can buy stake up to 49 percent in Indian airlines, But the question arises is will any Foreign Airlines invest in Indian aviation market which is highly taxed which basically means government still thinks that travelling as fast as Airplane is only for rich people and hence should be taxed heavily(which is 100 percent wrong in era of globalization).
So In present environment I suggest to avoid Airlines stocks to invest in as it is highly risky sector with wafer thin profit margins(for a company working ideally). Now since management of Airlines in India is substandard (not very intelligent/intellect) hence we cant see them turning their balance sheets into green either.
I was checking website of Federation of Indian Airlines and it is showing a disastrous picture of Indian aviation market due to policies of government. Now all of you might be thinking why one should avoid Aviation sector stocks in india? Here are the reasons supporting the same thinking:
1. Taxes on ATF in india is too high: ATF price in India is 77 percent higher then International ATF price ie currently it is Rs. 37,800 / kilolitre whereas international price is Rs. 21,400 / kilolitre, This brings in additional burden for Indian domestic carriers which can be negated if Aviation ministry makes some logical changes in their policies.
