India allows foreign investors to own up to 49pc of Air India

New Delhi : India cleared a proposal yesterday to allow foreign investors to own up to a 49 per cent stake in state-run carrier Air India, paving the way for global airlines to bid for the loss-making flagship carrier.

It brings Air India, which previously had to be fully locally owned, in line with the country’s other local airlines in which foreign investment is allowed.

India allows 100 percent foreign investment in its other local airlines, but caps foreign airlines’ stake at 49pc.

In Air India, it will now allow a maximum of 49pc foreign ownership including that by airlines. But substantial ownership and effective control of Air India must remain with an Indian national, the government said in a statement.

Prime Minister Narendra Modi’s cabinet gave the go-ahead last year to sell Air India, after successive governments spent billions of dollars in recent years to keep it going. However, it has yet to decide what to do with the carrier’s debt burden of $8.5 billion.

As per the new policy announced, the Government also allows  FDI of up to 100pc on the automatic route in most sectors/activities.

In the recent past, measures undertake by the Government have resulted in increased FDI inflows into the country increasing to a level of US 36.05 billion in 2013-14 to US$45.15bn in 2014-15,  and to US$ 55.46bn in 2015-16.  In the financial year, 2016-17, total FDI of US$ 60.08bn has been received which is an all-time high.