Asserting that airports and tourism would be the focus of growth in the infrastructure sector, the government on Thursday proposed to raise the cap on foreign direct investment in the civil aviation sector from 40 to 49 per cent.

Pegging the plan outlay for the sector at about Rs 1,621 crore (Rs 16.21 billion) -- a hike of about Rs 135 crore (Rs 1.35 billion) from the revised estimate for the last fiscal, Finance Minister P Chidambaram, while presenting the 2004-05 General Budget, said there was an "urgent need" for infusing huge amounts of capital in this sector besides telecom and insurance.

Probably keeping in mind the moves to restructure and modernise two key airports at Delhi and Mumbai as well as the stalled move to privatise public sector carriers Air-India and Indian Airlines, he also said the government would "selectively employ" the tools of divestment and privatisation but in line with the declared policy outlined by the Common Minimum Programme.

However, he withdrew the tax exemption granted to an Indian company to acquire an aircraft or an aircraft engine on lease from a foreign enterprise prospectively from September this year, saying the exemption had "outlived its utility".