In a big development, the Union Cabinet on Wednesday decided that Non-resident Indians can acquire a 100% stake in Air India under the automatic route. Earlier, the FDI was capped at 49%. Terming this as a “milestone” move, Union Minister Prakash Javadekar stated that this would pave the way for fresh investments. Moreover, he contended that the passengers would continue to get better services.
Prakash Javadekar remarked, “Today’s decision of Air India also is one milestone decision where NRIs who are Indian nationals will get permission to invest 100% in Air India. And this will pave the way for fresh investments. Passengers will continue to get better and better services. And, at the same time, this will improve the overall atmosphere of investments.”
#Cabinet, approves #FDI policy on Civil Aviation: permits Foreign Investments in Air India Ltd by NRIs, who are Indian Nationals, up to 100% under the automatic route. "India continues to remain a preferred destination for Global FDI" @PrakashJavdekar— K.S. Dhatwalia (@DG_PIB) March 4, 2020
The Union Cabinet's decision comes at a juncture when the Centre has announced the sale of its 100 per cent stake in debt-laden Air India. The government has set the deadline for submitting Expression of Interest as March 17, 2020. As a part of the disinvestment, Air India would sell a 100 per cent stake in Air India Express and 50 per cent shareholding in AISATS, an equal joint venture between Air India and Singapore Airlines.
The government-owned airline’s interests in entities such as Air India Engineering Services, Air India Air Transport Services, Airline Allied Services and Hotel Corporation of India would not be a part of the disinvestment transaction. As per the bid document, a debt of Rs.23,286.5 crore would remain with Air India and Air India Express at the time of closing of the disinvestment. Incidentally, this is the second occasion on which the Centre has formally proposed selling a stake in Air India. In 2018, the government not only sought to sell 76 per cent equity share capital of Air India but also invited the private sector to take control of the management. However, the proposal failed to attract any bidders.