Cabinet FDI Policy Two New Delhi

Gladys Abbott
January 11, 2018

Foreign ownership might soon be a reality for Air India as the government pilots efforts to privatise the ailing national airline and turnaround its flagging fortunes similar to the likes of British Airways and Qantas.

Aviation think tank CAPA welcomed the decision to allow foreign airlines to invest up to 49 per cent in Air India.

On whether the move will attract foreign bidders for Air India's disinvestment, Raju said, "We would like them to come and participate".

"It has now been decided that for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern, FDI applications would be processed by Department of Industrial Policy and Promotion (DIPP) for government approval".

The BJP government at the centre has made a decision to allow 100% Foreign Direct Investment (FDI) through the automatic route in single brand retail.

Foreign airlines were so far barred from owning any share in Air India, even though they were allowed to have up to 49 percent stake in other Indian airline companies.

Foreign airlines can now own up to 49% stake in national carrier Air India, with the Cabinet clearing a proposal in this regard today.

Currently, foreign investment of up to 100 per cent is allowed in Indian airlines, with a ceiling of 49 percent on holding by foreign airlines. "It is a pity that instead of formulating policies for the welfare, upgradation and modernisation of existing retail trade, the government is more interested in paving way for the MNCs to control and dominate the retail trade of India", National Secretary General of CAIT Praveen Khandelwal said.

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Janne Einola, country manager at the India unit of Swedish fashion retailer H & M Hennes & Mauritz AB, said: "We are happy to hear about the India sourcing requirement being offset towards H&M's global sourcing from India; while it is in the right direction, we look forward to the same relaxation for the period beyond the initial five years as well, which works towards ease of doing business in India".

Singapore Airlines today said it will keep options open on Air India disinvestment.

The Union Cabinet on 28 June 2017 gave an "in-principle" go-ahead for the strategic disinvestment of debt-ridden Air India after tasking a Group of Ministers to work out its modalities.

However, the provision was not applicable to Air India, thereby implying that foreign airlines could not invest in Air India.

This condition was relaxed subject to certain conditions.

"Interesting-Commandeer a low valuation report, sell Air India to a crony oligarch who in turn disinvests 49 per cent to a foreign airline at hefty premium", Congress spokesperson Manish Tewari said in a tweet.

The UPA government has earlier extended the FDI to 49% in this sector.

The Left party advised the government heed suggestions of the Parliamentary Standing Committee on Transport, Tourism and Culture that asked it to review its decision on privatisation of Air India and provide five years to revive the airline with its debt written off.

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