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With Air India divestment on the cards, government may further liberalise FDI in aviation

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In the background of Air India divestment on the cards, the government on Friday said it will look at further liberalising the foreign direct investment (FDI) norms in aviation.

With Air India divestment on the cards, government may further liberalise FDI in aviation
In the background of Air India divestment on the cards, the government on Friday said it will look at further liberalising the foreign direct investment (FDI) norms in aviation.
This comes at a time when the government is expected to soon float the preliminary information memorandum for divestment of Air India with lucrative terms and conditions.
Last year, ahead of the 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.
As per the extant policy, foreign airlines were 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.
Earlier, foreign investment up to 49 percent was allowed under automatic route in domestic airlines but this limit was raised to 100 percent in 2016, with FDI up to 49 percent permitted under automatic route and FDI beyond 49 percent through government approval.

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