Non-Residents of India (NRIs) who are Indian nationals will now be able to invest 100% in national carrier Air India, which has currently been put up for sale. Earlier, the Foreign Direct Investment (FDI) policy in Civil Aviation allowed NRIs to purchase only 49% in the national carrier. The Cabinet has now approved 100% FDI though automatic route for NRIs.
Addressing the media after the cabinet meeting, Minister of Heavy Industries and Public Enterprises Prakash Javadekar said that this will now pave way for new investment into Air India, while being able to offer better services to passengers.
He also said that this would be in accordance with the Substantial Ownership and Effective Control (SOEC) framework. As per the SOEC framework, an airline that flies overseas from a country should be owned majorly by the national of that country or by its government. The investment by NRIs will be treated as domestic investment.
The Cabinet’s decision comes at a time when the government has put Air India on the block and is looking to sell 100% in the airline, along with Air India Express and Air India’s 50% stake in (Air India Sats Airport Services Pvt. Ltd (AISATS), which is a gateway services and food solutions provider. It is a 50:50 joint venture between Air India and Singapore Airlines.
After its unsuccessful bid to sell Air India in 2018, the government this time has decided to offload its entire stake. In 2018, it had offered to sell its 76% stake in the airline.
Of the total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286 crore.
Air India, along with its subsidiary Air India Express, has a total operational fleet of 146 airplanes.
Further, the disinvestment department has extended the last date for submission of written queries on the Performance Information Memorandum and Share Purchase Agreement to March 6.
With agency inputs