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FDI policy rules out sale of stake in Air India to foreign airline

A ministerial group has been formed to look into the modalities of Air India’s divestment process.

india Updated: Aug 28, 2017 21:01 IST
Indo Asian News Service
Indo Asian News Service
Indo Asian News Service, New Delhi
Foreign Direct Investment,FDI,Air India
An Air India aircraft takes off as an IndiGo Airlines aircraft waits for clearance at the Sardar Vallabhbhai Patel International Airport in Ahmedabad, July 7, 2017. (Reuters File Photo)

The government’s new foreign direct investment (FDI) policy suggests that foreign airlines may not be allowed to buy a stake in the national carrier Air India.

In the “Consolidated FDI Policy” released by the Ministry of Commerce and Industry on Monday, the sub-section which allows foreign airlines to invest up to 49% paid-up capital of domestic passenger carriers is not applicable in the case of Air India.

However, the policy, subject to certain conditions, allows foreign airlines to own up to 49% stake in other domestic passenger carriers.

The development comes at a time when the central government has decided to divest its stake in the airline.

A ministerial group has been formed to look into the modalities of Air India’s divestment process.

The group — Air India-specific Alternative Mechanism — is headed by Finance Minister Arun Jaitley.

The group has been mandated to guide the strategic divestment process and to decide on key issues such as treatment of AI’s debt and hiving-off of its assets.

The airline, which is under a massive debt burden of Rs 50,000 crore, had posted an operating profit of Rs 105 crore in 2015-16. For the last fiscal (2016-17), the company is expected to report an improved operating profit margin.

The flag carrier had got a new lease of life on April 12, 2012, when the then United Progressive Alliance (UPA) government had approved a Rs 30,000 crore turnaround package (TAP) and financial restructuring plan (FRP) to be rolled out till the year 2021.

First Published: Aug 28, 2017 21:01 IST