In a move that would significantly impact the privatisation of Air India, the government on Wednesday approved changes in foreign direct investment (FDI) norms allowing foreign carriers to own 49 per cent in Air India. The Modi government has brought AI on a par with private Indian airlines in terms of being eligible to be owned up to 49% by foreign airlines with the condition being that the desi carriers' substantial ownership and control (SOEC) should remain with Indians and the local JV partner.
Besides, the Singapore Airlines group has significant number of flights connecting various Indian cities.
Foreign airlines were 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 per cent of their paid-up capital in 2012. "This would go against the interests of the domestic manufacturing and also would discourage the future investment in manufacturing in India and therefore would go against the own declared policy of the government of encouraging Make in India", Mahajan said.More news: Supreme Court will weigh letting states collect tax on e-commerce sales
Last week, Leslie Thng, CEO, Vistara said that Tata Sons and Singapore Airlines have an "open mind" on the issue of the Air India disinvestment and that they will evaluate any potential business case therein.
On whether it would be interested in Air India disinvestment, Emirates said it has no plans to buy or acquire any airline.
Currently, Air India is incurring a net loss of $569 million annually as per the latest official data presented by India's Civil Aviation Ministry in the Parliament.More news: Wells Fargo Believes Johnson & Johnson (NYSE: JNJ) Won't Stop Here
"Steps such as FDI reform will encourage foreign investors and allow India to realise its dream of becoming one of the world's most powerful economies", he said in a statement.
While there have been reports suggesting that Tatas and Singapore Airlines might jointly bid for Air India, there has been no official word from the government or the carriers concerned.
Under the SOEC clause, the new promoters of Air India will have to keep its chairman Indian and can not shift its operational headquarters to anywhere outside the country.More news: CES 2018: Lenovo smart display with Google assistant launched