Air India stake sale: Govt allows 49% foreign ownership in national carrier

The government on Wednesday allowed foreign entities to own up to a 49 per cent stake in Air India to increase the prospect of successful disinvestment in the carrier.

In a Cabinet meeting chaired by Prime Minister Narendra Modi, the government clarified that substantial ownership and effective control of Air India would continue to be vested in Indian nationals. “Foreign investments in Air India, including that of foreign airlines, shall not exceed 49 per cent either directly or indirectly,” the government said.

This effectively allows a foreign airline to bid for Air India after forming a joint venture with an Indian entity. For example, Singapore Airlines (SIA) can make a bid after forming a joint venture with Tata Sons, provided the Tatas own a majority stake in the venture.

The two entities already own Vistara in a similar arrangement. Tata Sons Chairman N Chandrasekharan had earlier said the group would consider buying Air India if it made business sense.

Last week, Vistara Chief Executive Officer Leslie Thng said Singapore Airlines would consider bidding for Air India. “I think Singapore Airlines has an open mind. It really depends eventually on whether there is a business case. I don’t think we know enough at this moment,” said Thng, a former SIA executive. When asked, an SIA spokeswoman said the airline’s priority was further expansion of Vistara. “However we will keep our options open with respect to proposed disinvestment of Air India,” she added.

An Emirates spokesperson said “Emirates has no plans to buy or acquire any airline. We continue to focus on our organic growth, and will partner with other airlines where it benefits our customers and makes commercial sense.”

Experts welcomed the government’s move. “We see Air India’s disinvestment with active participation from foreign airlines as a major reform.

It sends a very important signal to global investors and may result in four to six serious bids,” said Kapil Kaul, chief executive officer-South Asia, of aviation consultancy firm CAPA.