Rules to be amended to attract foreign buyers for Air India |
India might look to dilute substantial ownership and effective control (SOEC) clause in the FDI guidelines for the airline sector to ensure that aviation biggies` participate in the bidding for Air India sale next year. The Department for Promotion of Industry and Internal Trade - DPIIT, has been discussing the proposal with the administrative Civil Aviation Ministry. The present FDI rules allow up to 100 percent FDI in domestic carriers but the investment by a foreign airline is capped at 49 percent. Further, substantial ownership and effective control has to be in the hands of Indians. In most of the aviation‐related activities such as ground‐handling, greenfield airports, and Maintenance, Repair, Overhaul, FDI is allowed up to 100 percent through automatic route. Relaxation in FDI rules for airlines may help generate interest among foreign players keen to get a foothold in the Indian market. As the government`s bid to sell majority 76 percent stake in Air India failed last year with not a single private firm showing interest, the dilution in FDI norms could encourage foreign airlines and other investors to participate in the bidding this time. The government is making an all‐out attempt to completely exit Air India. Finance Minister Nirmala Sithraman has set March 31, 2020 as the deadline for Air India disinvestment.
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