NEW DELHI: In a move that would significantly impact the privatisation of Air India, the government on Wednesday approved changes in foreign direct investment (FDI) norms allowing foreign carriers to own 49 per cent in Air India.
The decision ought to smoothen the process of disinvestment as it is bound to open up competition for buying stake in the airline.
Aviation experts said the move would not just increase the bidders but also the valuation of the debt-ridden national carrier.
Foreign airlines were so far barred from owning any share in Air India, though they were allowed to have up to 49 per cent stake in other Indian airlines. For instance, 49 per cent stake in Indian airlines such as Vistara and AirAsia India are owned by Singapore Airlines and AirAsia Berhad respectively.
Wednesday’s move paves the way for Indian players to tie up with foreign airlines as the substantial ownership and effective control (SOEC) clause will still be applicable on the national carrier which means that foreign carriers would be able to bid for Air India only if they partner with an Indian airline. Under the SOEC clause, the new promoters of Air India will have to keep its chairman Indian and cannot shift its operational headquarters to anywhere outside the country.
“Foreign airlines allowed to invest up to 49 per cent under government approval route in Air India as well. Substantial ownership and control (SOEC) of Air India shall continue to be vested in Indian National. Foreign investment(s) in Air India, including that of foreign airlines, shall not exceed 49 per cent either directly or indirectly,” the government said in a statement.