Cabinet approves up to 100% FDI by NRIs in Air India

A meeting of the union cabinet, chaired by Prime Minister Narendra Modi has approved amendments to the extant FDI Policy to permit foreign investment in Air India Ltd by NRIs, who are Indian Nationals, up to 100 per cent under automatic route.

As per the present FDI policy, 100 per cent FDI is permitted in scheduled air transport service/domestic scheduled passenger airline (automatic up to 49 per cent and government route beyond 49 per cent). However, for NRIs, 100 per cent 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 and effective control (SOEC) shall be vested in Indian nationals as per aircraft rules, 1937.  However, for Air India Ltd, as per the present policy, foreign investment, including that of foreign Airline(s), shall not exceed 49 per cent, either directly or indirectly, subject to the condition that substantial ownership and effective control of Air India Ltd shall continue to be vested in Indian Nationals. Therefore, although 100 per cent FDI is permitted under automatic route for NRIs in scheduled air transport service/domestic scheduled passenger airline, it is restricted to 49 per cent in case of Air India.

As per the proposed strategic disinvestment of 100 per cent of Air India Ltd, the government will have no residual ownership and Air India will be completely privately owned post sale. It has also0 been decided that foreign investment in Air India Ltd be brought on a level playing field with other scheduled airline operators.  

The amendment in FDI policy will permit foreign investment in Air India Ltd at par with other scheduled airline operators, ie, up to 100 per cent in Air India Ltd by those NRIs, who remain Indian Nationals. The proposed changes in FDI Policy will enable foreign investment by NRIs into Air India Ltd of up to 100 per cent, under automatic route.

The amendment to the FDI policy is meant to liberalise and simplify the FDI policy to provide ease of doing business in the country, which would lead to largest FDI inflows and thereby contribute to growth of investment, income and employment, the release added.