​​​
  1. Why government capped 49% FDI in Air India? Hint: it’s air ‘India’

Why government capped 49% FDI in Air India? Hint: it’s air ‘India’

After the Union Cabinet on Wednesday approved investment of up to 49% in Air India, Minister of State for Civil Aviation Jayant Sinha says that the government wants Air India to remain an Indian carrier.

By: | Updated: January 12, 2018 11:18 AM
air india, fdi, aviation sector, retail, davos, maruti, indigo Jayant Sinha says, “We want Air India to be an Indian carrier.” (Image: PTI)

After the Union Cabinet on Wednesday approved investment of up to 49% in Air India, Minister of State for Civil Aviation Jayant Sinha says that the government wants Air India to remain an Indian carrier. “We want Air India to be an Indian carrier. When you look at what the foreign ownership caps are around the world, they are 49% or below 49%. The typical air services agreement that is signed for bilateral rights also in intended to ensure that substantial ownership and effective control stays with nationals of the country,” Jayant Sinha told CNBC TV18.

Interestingly, while the Union Cabinet allowing 100% foreign direct investment into Indian airline operators under the automatic route, it has different rules for state-run Air India and allowed foreign airlines to invest up to 49% under the approval route, subject to the conditions that: (i) Foreign investment(s) in Air India, including that of foreign Airline(s), shall not exceed 49 per cent either directly or indirectly ensuring that substantial ownership and effective control of Air India shall continue to be vested in Indian National.

Further, the Civil Aviation minister said that the government is looking to close the stake sale by 2018-end. “We will make every effort to protect Air India staff. We don’t want to saddle Air India or its subsidiaries with unsustainable debt,” the Civil Aviation Minister told the channel.  

Earlier this week, a parliamentary panel on transport, tourism and culture recommended that the national carrier Air Indian should be given at least five years to revive and write-off its debt. The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest Air India and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride.”

The draft report said, “Air India should be given a chance for at least five years to revive themselves”. The tenure of five years indicates the end of the turnaround plan and FRP period in 2022. It said the airline’s debt was “due to policy directions of the ministry of civil aviation.

Air India may be permitted to function as a government PSU with less government control”. The committee also expressed apprehension that Air India’s strategic disinvestment “would result in job loss of many people” and asked the government to “make an assessment” of the job loss before deciding on stake sale.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top