Air India, a state-owned airline company has been struggling to survive for quite a long period of time now. The government came up with the idea of selling its stake and equalize the losses. The government had attempted to sell 76% of Air India’s stake in the past but failed to do so. Changing the companies law has easied Foreign Direct Investment. Under the new amendment, there will be changes in the way of direct overseas listing and decriminalizing offenses.
As per the present FDI Policy, 100% FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline (Automatic up to 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. – Indian Government
Previously, NRIs could only buy stake up 49%. But now they can acquire up to 100% stake, which will help the government in the divestment of the debt-ridden airline. “Today’s decision on Air India is one milestone decision where NRIs who are Indian citizens will get permission to invest 100% in the airline,” Information and Broadcasting Minister Prakash Javadekar told reporters in a briefing. Even after the disinvestment, substantial ownership and handling of airplanes will remain in hands of the Indian nationals.
Companies amendment acts have been made as part of the ‘ease of doing businesses‘ agenda. The amendment is “meant to liberalize and simplify the FDI policy to provide ease of doing business in the country”, the government said.