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India: Union Cabinet allows foreign carriers to own 49% in Air India

The Union Cabinet gave the green light to changes in Foreign Direct Investment (FDI) to let foreign carriers own 49% in Air India under approval route.

The amendment is a crucial one since it would allow foreign airlines to submit bids for the national carrier, but with an Indian partner.

The FDI policy previously permitted foreign carriers to own 49% in Indian carriers, but kept Air India out of it.

“Foreign investment(s) in Air India including that of foreign Airline(s) shall not exceed 49 per cent either directly or indirectly. Substantial ownership and effective control of Air India shall continue to be vested in Indian National,” the government expressed in a release.

The substantial ownership and effective control (SOEC) clause would be still valid on the national carrier. This means the new promoters of Air India would have to keep its chairman as Indian and also cannot move its operational headquarters to anywhere outside India.  

The government is currently working on the modalities for strategic disinvestment of the unprofitable Air India and is expected to entice more bidders to come to the fore.

A group of ministers is finalizing the details for the proposed strategic stake sale in Air India.

Last year, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval for the strategic disinvestment of the airline.

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