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10 January 2018
 |
| Air India (The Total Investment & Insurance Solutions) |
In a
move designed to expedite the strategic divestment in Air India, the Cabinet on
Wednesday decided to open up the national carrier for foreign direct investment
(FDI) up to 49 per cent under the approval route.
The
present rules allow foreign airlines to invest under the government approval
route in the capital of Indian airline companies up to the limit of 49 per cent
of their paid-up capital, which is, however, not applicable to Air India.
"It
has now been decided to do away with this restriction and allow foreign
airlines to invest up to 49 per cent under approval route in Air India subject
to the conditions that foreign investments in Air India including that of
foreign airlines shall not exceed 49 per cent either directly or
indirectly," an official release said here, following a Cabinet meeting. The Total Investment & Insurance
Solutions
"Substantial
ownership and effective control of Air India shall continue to be vested in
Indian National," it added.
Currently,
a ministerial group -- Air India-specific Alternative Mechanism -- headed by
Finance Minister Arun Jaitley is looking into the modalities to divest
loss-making Air India. The group has been mandated to decide on key issues such
as treatment of Air India's debt and hiving-off of its assets.
Last
month, Minister of State for Civil Aviation Jayant Sinha had announced that
British consulting multinational EY has been appointed as transaction advisors
to aid the government in the strategic divestment of Air India.
Making
the announcement, Sinha said the Air India stake sale would most likely be an
offering for an integrated airline through the bidding process "and both
domestic and international operations will be divested as one
entity".
In
September, the Department of Investment and Public Asset Management had invited
bids for the role of advisors to guide the government on the financial and
legal issues associated with the strategic disinvestment.
The
airline, which is under a massive debt burden of Rs 50,000 crore, had posted an
operating profit of Rs 105 crore in 2015-16, and is expected to report an
improved operating profit margin for the last fiscal.
The
national carrier got a new lease of life in April 2012, when the then UPA government
approved a Rs 30,000-crore turnaround and financial restructuring package
spanning up to 2021.The Total
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