New Delhi [India], Mar 4 : The Union Cabinet on Wednesday approved an amendment to the foreign direct investment policy on civil aviation, allowing non-resident Indians (NRIs) to acquire 100 per cent equity stake in Air India.
"The FDI policy has been amended to permit foreign investments in Air India Ltd by NRIs who are Indian nationals up to 100 per cent under the automatic route," said Union Minister Prakash Javadekar.
"Earlier, only 49 per cent was available for sale to NRIs in Air India. Now, they can purchase 100 per cent," he said while briefing reporters.
As per the present FDI policy, 100 per cent FDI is permitted in scheduled air transport service and domestic scheduled passenger airline (automatic up to 49 per cent and government route beyond 49 per cent).
However for NRIs, 100 per cent FDI is permitted under automatic route in scheduled air transport service and domestic scheduled passenger airline.
Further, FDI is subject to the condition that substantial ownership and effective control (SOEC) will be vested in Indian nationals as per Aircraft Rules 1937.
However for Air India Ltd, as per the present policy, foreign investment in Air India including that of the foreign airline will not exceed 49 per cent, either directly or indirectly, subject to the condition that substantial ownership and effective control of Air India continues to be vested in Indian nationals, according to an official statement.
Therefore, although 100 per cent FDI is permitted under automatic route for NRIs in scheduled air transport service and domestic scheduled passenger airline, it is restricted to be only 49 per cent in the case of Air India.
In light of the proposed strategic disinvestment of 100 per cent of Air India by the government, Air India will have no residual government ownership and will be completely privately owned.
It has been decided that foreign investment in Air India be brought on a level playing field with other scheduled airline operators, said the statement.
The amendment in FDI policy will permit foreign investment in Air India at par with other scheduled airline operators, that is up to 100 per cent in Air India by those NRIs who are Indian nationals.
The proposed changes in FDI policy will enable foreign investment by NRIs into Air India up to 100 per cent under the automatic route.
"The amendment to the FDI policy is meant to liberalise and simplify the FDI policy to provide ease of doing business in the country, leading to largest FDI inflows and thereby contributing to the growth of investment, income and employment.
( With inputs from ANI )