The Union Cabinet on Wednesday decided to allow non-resident Indians to control up to 100% stake in national carrier Air India. Earlier, NRIs were allowed to own up to 49% stake.
The government first announced its intention to divest its entire stake in Air India in January – a major shift from its stance in 2018 when it wanted to divest only 76% stake. The proposed stake sale, however, failed to take off on both occasions.
“Today’s decision on Air India is one milestone decision where NRIs...will get permission to invest 100% in the airline,” Union minister Prakash Javadekar told reporters.
According to the existing policy, NRIs were allowed 100% foreign direct investment in scheduled airlines under the automatic route. However, in the case of Air India, this investment was restricted to 49% because Substantial Ownership and Effective Control norms required that foreign investment in the national carrier must not exceed 49%, directly or indirectly, so that effective control remained in Indian hands.
After the rule was amended by the Cabinet on Wednesday, NRIs can invest 100% through the automatic route in Air India as well.
In March 2018, the government had planned to divest 76% stake in Air India, ignoring a parliamentary panel’s recommendation to give the debt-ridden airline five years to revive itself. The government did not receive any expressions of interest from potential bidders by the end of the deadline. In November 2019, Civil Aviation Minister Hardeep Singh Puri told Parliament that the Centre will have to shut down the national carrier if it was not privatised.