The government has altered the Foreign Direct Investment (FDI) norms allowing non-resident Indians (NRIs) to acquire up to a 100 per cent stake in Air India.
The Finance Ministry notified the changes in FDI policy that will permit foreign investment in the national carrier at par with other scheduled airline operators.
As per the notification by the Department of Economic Affairs (DEA) that comes under the Finance Ministry, foreign investments in Air India, comprising that of foreign airlines shall not exceed 49 per cent.
It further stated that the said investment limit cannot be breached either directly or indirectly, except in case of those NRIs, who are Indian nationals, where foreign investments are allowed up to 100 per cent under automatic route.
"Substantial ownership and effective control of M/s Air India Limited shall continue to be vested in Indian Nationals as stipulated in Aircraft Rules, 1937," DEA said in the notification.
Changes in FDI rules permitting NRIs to bid for a 100 per cent stake in the debt-laden national carrier were approved by the Union Cabinet in March this year. The (FDI) norms were altered to make the government's disinvestment process more attractive since earlier attempts to draw buyers failed.
The government has put its entire stake in Air India up for sale. Earlier, NRIs could own up to 49 per cent in the airline.
The Centre had in June extended the deadline to bid for Air India by two months till August 31 as the COVID-19 fallout disrupted economic activity globally.
After its unsuccessful bid to sell Air India in 2018, the government in January 2020 restarted the divestment process and invited bids to sell 100 per cent equity in the state-owned airline, including Air India's 100 per cent shareholding in AI Express Ltd and 50 per cent stake in Air India SATS Airport Services Private Ltd.
While issuing the Expression of Interest (EoI) in January, the last date for bids was kept on March 17, which was later extended till April 30. This was further extended to June 30, and subsequently till August 31.
In 2018, the government had offered to sell 76 per cent stake in the airline.
The COVID-19 pandemic and subsequent lockdowns have disrupted economic activities globally.
The aviation sector has been hit hard by the coronavirus pandemic, with airlines cancelling flights and announcing pay cuts for employees.