Request a call back

Govt now allows foreign airlines to invest up to 49% in Air India

Govt now allows foreign airlines to invest up to 49% in Air India

New Delhi : The Union Cabinet on Wednesday eased foreign direct investment (FDI) norms in various sectors, including Civil Aviation, allowing foreign airlines to invest up to 49 per cent under government approval route in Air India.

“These are intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country. In turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment,” a government press release stated. Read the full story here.

Though the earlier policy allowed foreign airlines to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, Air India was not included in this scheme. “It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49% under approval route in Air India,” the press release said.

However, the government has imposed two conditions. First, the investment by foreign airline should not exceed 49 per cent either directly or indirectly. Second, the substantial ownership and effective control of Air India will also continue to be vested in Indian National.

The announcement comes close on the heels of the Parliamentary Standing Committee on Transport, Tourism and Culture concluding in its draft report that the government should review its decision to privatise or disinvest Air India and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride.” Read more here.

Air India had a total debt of about Rs 48,877 crore at the end of March 2017, of which about Rs 17,360 crore were aircraft loans and Rs 31,517 crore were working capital loans. The airline is expected to report a net loss of Rs 3,579 crore for 2017-18, as per budget estimates projected for 2017 -18 from a provisional net loss of Rs 3,643 crore for 2016-17, PTI reported.