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New Delhi, March 4, 2020
The Union Cabinet today approved an amendment in the extant Foreign Direct Investment (FDI) Policy to permit foreign investment of up to 100 per cent in national carrier Air India by non-resident Indians (NRIs) who are Indian nationals under the automatic route.
The decision assumes significance at a time when the government has proposed strategic disinvestment of 100% of Air India.
At present, 100% FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline (Automatic route upto 49% and Government route beyond 49%).
However, for NRIs 100% FDI is permitted under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline.
Further, FDI is subject to the condition that Substantial Ownership & Effective Control (SOEC) shall be vested in Indian nationals as per Aircraft Rules, 1937.
However, for Air India Ltd., as per the present policy, foreign investment(s), including that of foreign airline(s) shall not exceed 49%, either directly or indirectly, subject to the condition that substantial ownership and effective control of Air India Ltd. shall continue to be vested in Indian Nationals. Therefore, although 100% FDI is permitted under automatic route for NRIs in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline, it is restricted to be only 49% in case of Air India.
An official press release said that, in the light of the proposed strategic disinvestment of 100% of Air India Ltd. by the Government of India, the airline will have no residual Government ownership and will be completely privately owned, it had been decided that foreign investment in Air India Ltd be brought on a level playing field with other scheduled airline operators.
"The amendment in FDI policy will permit foreign investment in M/s Air India Ltd at par with other Scheduled Airline Operators i.e. upto 100% in M/s Air India Ltd by those NRIs, who are Indian Nationals. The proposed changes in FDI Policy will enable foreign investment by NRIs into M/s Air India Ltd. upto 100%, under automatic route," the release said.
The release said the amendment is meant to liberalise and simplify the FDI policy to provide ease of doing business in the country.