Allowing foreign airlines to own up to 49 per cent stake in Air India is a “considered decision” and will send out an important message to global investors, a senior government official said on Wednesday.
Against the backdrop of the government working out the contours for disinvestment in debt-laden Air India, the official also said that no overseas investor has so far expressed formal interest in the national carrier.
Soon after the Cabinet cleared the proposal to permit foreign carriers to have up to 49 per cent stake in Air India, a senior civil aviation ministry official said, “It is a considered decision of the government that we can tweak FDI norms so that some degree of foreign investment is allowed.”
The decision would send out an important message to global investors, he added. The Cabinet gave its approval to a number of amendments in the FDI policy, including those pertaining to Air India.
Now, foreign airlines have been allowed to have up to 49 per cent stake under the approval route in Air India subject to certain conditions, an official release said.
Foreign airlines were allowed to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital.The provision was however not applicable to Air India.
“It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India…,” a government statement said.
Foreign investments in Air India, including that of overseas airlines, should not exceed 49 per cent either directly or indirectly. “Substantial ownership and effective control of Air India shall continue to be vested in Indian national,” the statement said.
Regarding possible bidders for the national carrier, the official said so far no foreign investor has expressed formal interest in Air India. The Department of Industrial Policy and Promotion (DIPP) would have to notify the decision to allow foreign airlines to own stake in the national carrier, the official added.
Without providing any specific date, the official said expression of interest from bidders with respect to Air India stake sale could possibly be issued by the month-end.