New Delhi: Non-resident Indians (NRIs) who are Indian nationals can now own up to 100% stake in Air India. A meeting of the Union Cabinet headed by PM Modi Wednesday amended the FDI policy for AI — whose divestment process is underway — to allow its 100% ownership by NRIs through the automatic route without violating the substantial ownership and effective control (SOEC) norms.
Simply put, even if AI is fully owned by NRIs, its SOEC will deemed to be with Indians thereby protecting its rights to fly abroad under bilaterals of India with those countries and the Maharaja’s slots at international airports.
Apart from the Tata Group, two London-based NRI business houses are also reportedly looking at the Maharaja with interest. Potential buyers have to submit their expression of interest by March 17 and successful bidders will be announced by March 31, with the dates being subject to change depending on response.
Before Wednesday’s change, FDI in AI was limited to 49%. “AI divestment process is on and NRIs who are Indian citizens will also now get an opportunity to buy the airline. Earlier NRI ownership could not go beyond 49% (as 51% or majority control is required to be with Indians). Now NRIs can have up to 100% stake in AI without violating the SOEC norm. This way has been paved by the Modi government changing FDI norms for AI to ensure that our national carrier continues to fly and continues to serve people,” Union minister Prakash Javadekar said after the Cabinet meeting on Wednesday.
The changes in FDI policy will enable foreign investment by NRIs into AI up to 100%, under automatic route. AI’s debt-cum-liabilities combined burden is almost Rs 90,000 crore and aviation minister H S Puri has warned the airline may shut down if not sold off in the second attempt. The government has substantially sweetened the sale terms in the second attempt to ensure this time AI finds a buyer.
05/03/20 Saurabh Sinha/Times of India
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Simply put, even if AI is fully owned by NRIs, its SOEC will deemed to be with Indians thereby protecting its rights to fly abroad under bilaterals of India with those countries and the Maharaja’s slots at international airports.
Apart from the Tata Group, two London-based NRI business houses are also reportedly looking at the Maharaja with interest. Potential buyers have to submit their expression of interest by March 17 and successful bidders will be announced by March 31, with the dates being subject to change depending on response.
Before Wednesday’s change, FDI in AI was limited to 49%. “AI divestment process is on and NRIs who are Indian citizens will also now get an opportunity to buy the airline. Earlier NRI ownership could not go beyond 49% (as 51% or majority control is required to be with Indians). Now NRIs can have up to 100% stake in AI without violating the SOEC norm. This way has been paved by the Modi government changing FDI norms for AI to ensure that our national carrier continues to fly and continues to serve people,” Union minister Prakash Javadekar said after the Cabinet meeting on Wednesday.
The changes in FDI policy will enable foreign investment by NRIs into AI up to 100%, under automatic route. AI’s debt-cum-liabilities combined burden is almost Rs 90,000 crore and aviation minister H S Puri has warned the airline may shut down if not sold off in the second attempt. The government has substantially sweetened the sale terms in the second attempt to ensure this time AI finds a buyer.
05/03/20 Saurabh Sinha/Times of India
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