NEW DELHI : The Union cabinet on Wednesday approved a proposal to let non-resident Indians (NRIs) own up to a 100% stake in Air India Ltd as the government attempts to make a success of its second attempt to completely privatize the debt-laden airline.
The cabinet, headed by Prime Minister Narendra Modi, has approved an amendment to the foreign direct investment (FDI) policy to permit FDI in Air India by NRIs up to 100% under the automatic route, the government said.
The government, which aims to divest its entire stake in Air India, last month began the stake sale process by inviting offers from potential investors after a costly turnaround plan and an earlier effort to sell a controlling stake in the flag carrier failed. To sweeten the deal, the Centre has also reduced Air India’s debt from about ₹56,334 crore to about ₹23,287 crore.
The cabinet decision will give the government more flexibility to receive bids for Air India, said Dev Raj Singh, executive director at EY India.
“Under the existing policy, NRIs/ OCIs (Overseas Citizens of India) are permitted to invest under automatic route up to 100% in scheduled air transport services. The investment limit including NRIs, in Air India was restricted to 49%, which has now been aligned with the existing policy for investment by NRI in the civil aviation sector," Singh said.
Air India failed to attract a single bid last year when the government decided to sell a portion of its stake.
This time, the list of potential bidders include UK-based Hinduja group, Tata group and IndiGo, according to media reports.
Tata SIA Airlines Ltd, a joint venture between Tata Sons and Singapore Airlines, which operates Vistara, is evaluating the prospects of bidding for Air India, its chairman Bhaskar Bhat said recently.
Air India has 128 aircraft in its fleet, according to its website, while its subsidiaries Air India Express and Alliance Air have 25 and 19 planes, respectively.
The airline has 9,426 permanent workers, 4,201 contract employees, and 2,867 employees on deputation.
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