FDI floodgates open for foreign airlines to own up to 49% stake in Air India

January 11, 2018: In a move that beckoned the BJP government's strong FDI reform drive, the cabinet yesterday permitted foreign airlines to own up to 49 percent stake in India's national carrier%u2014Air India at a time when the process for strategic disinvestment of the airline is in the pipeline.

The cabinet chaired by Prime Minister Narendra Modi gave its nod to several amendments in the FDI policy, including foreign investments in Air India under the approval route, which is subject to certain conditions.

The cabinet also made it evident that foreign investments in Air India, including that of overseas airlines, will not be permitted to exceed 49 percent, either directly or indirectly.

The big bang FDI reform ahead of the Budget 2018 is akin to adding foreign wings to Air India, besides liberalising FDI policy to facilitate ease of doing business in India.

In his official Twitter handle, Minister of Civil Aviation, Ashok Gajapathi Raju eloquently confirmed the cabinet's decision to introduce a new foreign direct investment (FDI) policy for Air India.

Raju's in his official Twitter had commented: “Foreign airlines now allowed toinvest up to 49 percent under the approval route in Air India.”

According to the contour of the FDI policy, while the cabinet allowed foreign investors, including overseas airlines to own up stake in Air India, the national carrier's substantial ownership would continue to remain with an Indian national.

It may be recalled that foreign airlines were earlier allowed to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 percent of their paid-up capital. However, the same provision was not applicable to Air India.