Centre allows NRIS to own 100% stake in Air India
NEW DELHI: The Union cabinet on Wednesday allowed non-resident Indians (NRIS) to acquire up to 100% equity stake in Air India in order to make the sale offer of the state-run airline more attractive.
The proposed changes in the FDI policy will enable foreign investments by NRIS into Air India up to 100% under the automatic route, Union minister Prakash Javadekar told reporters after the cabinet meeting.
The automatic route allows a foreign investor to invest up to the permitted cap without prior approval of the government.
NRIS, who are Indian nationals, will get permission to participate in Air India’s strategic sale. Earlier, they were allowed to own up to 49% stake, Javadekar said. “Now they can take up to 100%.”
It wasn’t immediately clear if any NRI has expressed interest in participating in Air India’s sale.
In light of the proposed strategic disinvestment of government’s 100% stake in Air India, it has been decided that foreign investment in the company should be brought on a level playing field with other scheduled airline operators, a government statement said.
The statement said the decision to allow 100% FDI by NRIS in Air India is in conformity of the Substantial Ownership & Effective Control (SOEC) condition as NRIS are treated as Indian nationals. The SOEC condition means substantial ownership and effective control of Air India would continue to be vested in Indian nationals.
Foreign investments in Air India including that of foreign airlines should not exceed 49%, either directly or indirectly, the statement added, confirming an existing provision.
“Allowing NRI’S who are Indian Nationals to invest up to 100% is an excellent move to get the national airline moving again. This move will enable key players to take renewed interest in taking this cash trapped sector forward,” said Rajiv Chugh, national leader—policy Advisory & Speciality Services—ey India.
The government in January announced a plan to sell 100% stake in Air India, renewing its attempt to sell the state-owned airline after a similar move in 2018 failed to attract bidders. It has set March 17 as the deadline for the submissions of so-called expressions of interest (EOIS).
As part of the strategic disinvestment, the government also plans to sell its entire stake in Air India Express and 50% shareholding in equal joint venture Air India SATS Airport Services (AISATS). All the three will be sold together and management control of the national carrier will be transferred to the investor, the government said. The government previously offered only 76% of its stake for sale.