New Delhi opens door for foreign investment in Air India

Elias Hubbard
January 13, 2018

As per the extant policy, the foreign airlines are 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% of their paid-up capital.

Raju's in his official Twitter had commented: "Foreign airlines now allowed toinvest up to 49 percent under the approval route in Air India".

India's state-run carrier Air India is up for divestment with the government allowing foreign private investors to buy a 49 percent stake in the company.

The response was for queries related to the government permitting foreign airlines to have up to 49 per cent stake in Air India and whether Singapore Airlines would bid for the carrier. Vistara CEO Leslie Thng had last week said the airline's promoters had an open mind for AI if it made business sense.

Wednesday's move paves the way for Indian players to tie up with foreign airlines as the substantial ownership and effective control (SOEC) clause will still be applicable on the national carrier which means that foreign carriers would be able to bid for Air India only if they partner with an Indian airline.

The cabinet chaired by Prime Minister Narendra Modi gave its nod to several amendments in the FDI policy, including foreign investments in Air India under the approval route, which is subject to certain conditions.

A group of Indian ministers is in the process of finalising the contours for the proposed strategic stake sale in the national carrier Air India and expression of interest is likely to be invited from bidders soon.

"Air India has been facing losses for the past many years on account of a multitude of factors like high fuel prices, high-interest burden, increasing competition especially from low-priced carriers, high debt-equity ratio, and high airport charges", Jayant Sinha, India's Minister of State for Civil Aviation said last week.

The development is expected to clear the way for foreign airlines and Indian carriers to get into tie-ups to jointly invest in Air India.

Other reports by Click Lancashire

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