aviation | IST

Air India privatisation: Govt to invite expression of interest 'in next few weeks', says Hardeep Singh Puri

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The second attempt at the divestment of Air India is witnessing initial interest by several entities and the civil aviation ministry is expected to invite expression of interest for Air India in the next few weeks, aviation minister Hardeep Singh Puri told reporters on Tuesday.

The second attempt at the divestment of Air India is witnessing initial interest by several entities and the civil aviation ministry is expected to invite expression of interest for Air India in the next few weeks, aviation minister Hardeep Singh Puri told reporters on Tuesday.
The debt of the national carrier is unsustainable and it is making losses of up to Rs 26 crore every day so while it remains an asset, the problem is largely about the business model and hence, privatisation is the way forward, Puri added.
The alternative mechanism or the ministerial panel formed to oversee the divestment process will meet under the leadership of home minister Amit Shah before the preliminary bids are invited, said Puri.
On being asked if the liberalisation of foreign direct investment (FDI) norms in aviation is on the cards to make Air India divestment more attractive, the government clarified that its effective control and substantial ownership will stay with Indian nationals.
"Aircraft Act and Rules clearly state an airline in India should be substantially owned and controlled by Indian national. As per this rule, FDI in Airlines cannot exceed 49 percent," aviation secretary Pradeep Singh Kharola said.
Finance minister Nirmala Sitharaman in the Union Budget 2019-20 speech in July had said that the government will look at further liberalising FDI norms in aviation.
Last year, ahead of its first attempt at Air India's divestment, the Union cabinet had eased the FDI norms for the sector by allowing 100 percent FDI into domestic carriers under automatic route and had approved investment up to 49 percent under approval route in Air India.
Automatic route is a less restricted form of liberalisation where the investing company does not require the government or the Reserve Bank of India's (RBI) approval. However, the government or its agencies have a say if an investment is made through the approval route.
As per the extant policy, foreign airlines are 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, this provision was not applicable to Air India, thereby implying that foreign airlines could not invest in Air India.
The government had decided to do away with this restriction and allow foreign airlines to invest up to 49 percent under approval route in Air India subject to conditions, under a Cabinet decision taken in January 2018.
"Foreign investment(s) in Air India including that of foreign airline(s) shall not exceed 49 percent either directly or indirectly substantial ownership and effective control of Air India shall continue to be vested in Indian national," the statement said regarding the conditions.
So far, IndiGo has repeatedly indicated that it remains interested in Air India, but only in its international business.
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