Modi con­sid­ers easing rule to aid Air In­dia sale

Muscat Daily - - BUSINESS -

New Delhi, In­dia - In­dia is con­sid­er­ing amend­ing a rule to al­low over­seas con­trol of lo­cal air­lines, ac­cord­ing to a per­son fa­mil­iar with the matter, which may help its in­debted na­tional car­rier lure a for­eign suitor af­ter mul­ti­ple failed at­tempts for a sale.

At a meet­ing in early Novem­ber, In­dia’s Depart­ment for Pro­mo­tion of In­dus­try and In­ter­nal Trade asked the Aviation Min­istry if it would be fea­si­ble to change the so-called ‘sub­stan­tial own­er­ship and ef­fec­tive con­trol’ clause, the per­son said, ask­ing not to be iden­ti­fied as the de­tails aren’t pub­lic.

The rule man­dates that con­trol of an air­line al­ways re­main in In­dian hands, one of sev­eral rea­sons global firms have been wary of bid­ding for Air In­dia Ltd. Do­ing away with the ‘sub­stan­tial own­er­ship’ clause will en­able an over­seas stake­holder weigh in on ma­jor de­ci­sions of lo­cal air­lines. That may lure for­eign in­vestors to the Air In­dia sale with­out forc­ing the gov­ern­ment to go down the po­lit­i­cally con­tentious route of lift­ing the cap on over­seas eq­uity in­vest­ment.

Cur­rently, for­eign air­lines are barred from buy­ing more than 49 per cent in a lo­cal car­rier, and for­eign in­vestors, other than air­lines, need gov­ern­ment ap­proval to buy a stake big­ger than 49 per cent.

Fi­nance Min­is­ter Nir­mala Sithara­man in her bud­get speech in July had said Prime Min­is­ter Naren­dra Modi’s gov­ern­ment will look into sug­ges­tions of open­ing up sec­tors in­clud­ing aviation to more for­eign in­vest­ment. It has al­ready eased rules in a num­ber of ar­eas such as re­tail, man­u­fac­tur­ing and coal min­ing.

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