The Union Cabinet has decided to allow foreign investments, including from foreign airlines, to up to 49 percent in Air India, provided that substantial ownership and effective control of the airline is vested in an Indian national.
Permitting 49 percent foreign direct investment in Air India brings the airline at par with other domestic carriers and does away with the preferential treatment that was extended to the national carrier, Civil Aviation Minster Ashok Gajapathi Raju said on Wednesday.
The Union Cabinet has decided to allow foreign investments, including from foreign airlines, to upto 49 percent in Air India, provided that substantial ownership and effective control of the airline is vested in an Indian national.
"(The Cabinet decision means) Air India is on par with other airlines within the country. So, in a way it is not a differential treatment, rather the preference that was there (has been done away with)," Raju told PTI shortly after the government announced the move.
As per the existing policy, foreign investment upto 100 per cent was allowed for scheduled and non-scheduled operators and foreign airlines could invest up to a limit of 49 per cent of their paid up capital. However, these provisions were not applicable to Air India.
"It has now been decided to do away with this restriction," the government said in a statement.
On whether the move will attract foreign bidders for Air India's disinvestment, Raju said, "We would like them to come and participate."
"Ultimately the public sector is not supposed to become a financial drain for the tax payer. Air India's woes are basically financial. Basically it is that. So, lets see where it takes us," the minister said.
Last year, the Union Cabinet gave its in-principal approval for disinvestment of Air India and constituted an inter-ministerial group to chalk out the strategy for its stake sale.Air India has a debt of Rs 51,890 crore as on September 30 last year.