Tags:
Journalism of Courage
NEW DELHI, FEB 7: In a major shift in policy, the group of ministers (GoM) has recommended entry of foreign airlines in domestic aviation, and an increase in overall foreign direct investment in `civil aviation sector’ up to 49 per cent.
It is understood that the proposal was put before the Cabinet on Tuesday, after the GoM on foreign direct investment, headed by the finance minister Yashwant Sinha, recently cleared it. Interestingly, the GoM cleared the proposal despite reservations from the civil aviation ministry.
In Air India, the government has invited a strategic partner for its proposed 40 per cent equity sale, of which 26 per cent may be held by foreign airline(s)/non-resident Indians/overseas corporate bodies.
The balance 14 per cent Indian holding should be held by Indian nationals (other than NRIs/OCBs) and/or Indian companies registered under the Companies Act, 1956, which are majority owned and effectively controlled by Indian nationals. The GoM proposal takes the 26 per cent limit further. "If the government clears the proposal of raising FDI in civil aviation, the entire disinvestment strategy for both Air India and the India Airlines may have to be reworked," a ministry official said.
For Indian Airlines, the government has invited a strategic partner for divesting its 26 per cent equity stake. The strategic partner may be an Indian company or an NRI. As the draft civil aviation policy allows 40 per cent FDI in domestic airlines, the strategic partner is permitted 10.4 per cent FDI in the domestic carrier.
Non-resident Indians and overseas corporate bodies are permitted to invest up to 100 per cent in domestic aviation in the proposed policy.
Recently, the government extended the date for receiving technical bids for IA and AI for about two weeks to enable bidders to finalise their consortium partners.
Many bidders who had cleared the preliminary round have to finalise their consortium partners including Sky Team led by Air France, Emirates and Hindujas for Air India. In the case of IA, Videocon International is in talks with the US companies for a strategic alliance in its bid to acquire 26 per cent stake in the domestic carrier.
