New Delhi opens door for foreign investment in Air India

Galtero Lara
Enero 13, 2018

Foreign airlines will be able to buy up to 49% p of Air India under new rules approved by the government on Wednesday to boost the debt-laden flag carrier.

"Our priority is the further expansion of Vistara". Singapore Airlines owns a 49% stake in full service carrier Vistara.

Besides, the Singapore Airlines group has significant number of flights connecting various Indian cities.

"It has now been chose to do away with this restriction and allow foreign airlines to invest up to 49% under approval route in Air India subject to the conditions that foreign investment (s) in Air India including that of foreign Airline (s) shall not exceed 49% either directly or indirectly and substantial ownership and effective control of Air India shall continue to be vested in Indian National", the Indian government said in a statement after a cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday.

Prime Minister Narendra Modi's right-wing government has sought to encourage foreign companies to invest in India since coming to power in 2014. Vistara CEO Leslie Thng had last week said the airline's promoters had an open mind for AI if it made business sense.

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The centre has brought in changes in the foreign direct investment (FDI) policy with respect to audit firms, a move aimed at strengthening corporate governance in firms with foreign investment, and indirectly promoting local audit firms.

"Substantial ownership and effective control of Air India shall continue to be vested in Indian national", the release said.

While there have been reports suggesting that Tatas and Singapore Airlines might jointly bid for Air India, there has been no official word from the government or the carriers concerned. "This would go against the interests of the domestic manufacturing and also would discourage the future investment in manufacturing in India and therefore would go against the own declared policy of the government of encouraging Make in India", Mahajan said.

Air India ran losses for almost a decade after a botched merger in 2007 and has debts of around USD7.67 billion according to government figures.

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