Foreign airlines can invest up to 49% in Air India
Earlier, a parliamentary panel advised the government to defer Air India's (AI) privatization. They urged them to give 5yrs for AI's revival. However, PM Modi's cabinet is in no mood to entertain these suggestions. They have gone ahead and allowed foreign investment up to 49% in Air India. But, they did clarify that AI's "substantial ownership" and "effective control" will be with Indian nationals.
What is the controversy around AI's disinvestment?
AI has been surviving on taxpayers' money since long. In 2017, Cabinet Committee on Economic Affairs (CCEA) allowed "strategic disinvestment" of the airline. A turnaround plan was also proposed. However, a parliamentary panel asked government to reconsider its decision as AI had recently improved on various parameters. It also raised other issues like job loss for many, in case of disinvestment.
Now, what has the government decided?
However, their counsel may have been in vain. Until now, foreign airlines could own as much as 49% in an Indian airline. However, this didn't include AI. Now, despite many stakeholders and political bigwigs opposed to it, Modi's cabinet has approved foreign investment in AI.
Will this be able to bail out Air India?
But, will this bail out India's embattled national carrier? By March'17, AI had accrued a loss of Rs. 48,877cr. Moreover, it has not made any profits in over 10yrs. Considering these data, opening up FDI for AI may be a logical step. It broadens the potential investors net. Indians' emotional connect with the Maharaja has also been retained as majority-stake will remain with Indians.
