The Union Cabinet on Wednesday said foreign airlines would be able to invest up to 49 percent in Air India under approval route.
The Cabinet, headed by Prime Minister Narendra Modi noted that applicability of this ruling would be subject to two conditions- foreign investment(s) in Air India including that of foreign Airline(s) shall not exceed 49 percent, either directly or indirectly; and substantial ownership and effective control of Air India shall continue to be vested in Indian National.
As per the extant policy, foreign airlines are allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 percent of their paid-up capital. However, this provision was presently not applicable to the national carrier, thereby implying that foreign airlines could not invest in Air India.
However, this provision has been eliminated, thereby creating opportunities for foreign airlines to invest up to 49 percent under approval route in Air India, subject to the aforementioned conditions.
On a related note, the national carrier has a debt burden of more than Rs 52,000 crore.
The previous UPA Government had extended a bailout package worth little over Rs 30,000 crore to the national carrier for a ten-year period, starting from 2012.
In November 2017, Air India was slated to receive a loan worth Rs. 1,500 crore from the Bank of India towards the former's working capital requirements.
Prior to this, reports suggest that the airline had borrowed around Rs 3,000 crore as short tenure loans from two lenders - the IndusInd Bank and the Punjab National Bank.
The Air India group flies to 44 overseas and 75 domestic destinations. Flights operate to Copenhagen, Tokyo, Washington, Stockholm, Sydney, Hong Kong, Kabul, Colombo, Seoul, Singapore and London, among other foreign cities.