The Indian Ministry of Finance has apprised amendments in Foreign Direct Investment (FDI) rules. It will now permit Non-resident Indians (NRI) to acquire a 100% stake in Air India.
Now, like the other air operators, foreign investment in Air India Ltd is possible. Foreign investment in Air India by anyone, including that of foreign airlines, is limited up to 49%. If the person is an Indian national, the government permits 100% investment under the automatic route. 100 percent FDI is allowed in the scheduled Air Transport Service/Domestic Scheduled Passenger Airline as told by the government. (Automatic up to 49 percent and Government route beyond 49 percent)
After extending the last date to bid, for the third time, for Air India last month. In July, the Cabinet had updated FDI norms that let foreign NRIs to bid for 100% shares owned by the government for Air India. This change in FDI norms made the investment more attractive as the previous attempts to lure in investors were highly unsuccessful. And the ongoing pandemic hit the economic activities around the world, making things more difficult for the government. The deadline to bid, which initiated on January 27th of this year, now ends on 31st August,2020.
With this change of FDI norm, the government has advertised that a 100% share of Air India is for sale. Before this, no one but only Indian citizen could bid for a 100 % stake of the aviation company.
Department of Economic Affairs said in a notification that, “Substantial ownership and effective control of M/s Air India Limited shall continue to be vested in Indian Nationals as stipulated in Aircraft Rules, 1937.”
The DEA also informed that the investment must be on par with the relevant regulations of SEBI. And also permitted foreign airlines to take part in the equity of companies those of which operates cargo, airlines, helicopter and seaplane services as per limits and entry routes.
Foreign investors can own up to 49% of their paid-up capital subjected to some conditions in the invested Indian company, operating scheduled and non scheduled air transport services. The 49% investment will subsume FDI and FII/FPI investment.
Air transport services also include non-scheduled services like a helicopter, seaplanes, etc..