Tuesday, October 29, 2019

Government may relax FDI in aviation to spice up Air India deal

New Delhi: The Central government, which is expected to invite Expressions of Interest for Air India next month, is considering relaxing of Foreign Direct Investment (FDI) norms in the aviation sector to attract global bidders. The Department for Promotion of Industry and Internal Trade (DPIIT) and civil aviation ministry are expected to discuss relaxation of FDI limit from the current 49 per cent to majority stake-holding by foreign stakeholders.

In the Budget speech, Union Finance Minister Nirmala Sitharaman had proposed relaxation in FDI norms for certain sectors including aviation. The announcements were then seen as a bid to attract prospective buyers for Air India, since the 49 per cent limit on FDI has been a big block for foreign portfolio investors (FPI) investing in the debt-laden airline.

The government is also looking to do away with other terms and conditions that evoked a lukewarm response when AI was first put on sale last year.

According to officials, there were several proposals including one for giving majority stake to FDI as well as others where FPIs can invest a further percentage beyond 49 per cent, to give foreign shareholders a majority stake. In the aviation sector, 100 per cent FDI is allowed under automatic route for MRO (Maintenance, Repair, Overhaul), ground handling and aircraft purchase, but not for control of airlines.
29/10/19 New Indian Express

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