Foreign Direct Investment (FDI) in Air India

In the second week of January this year, the Government issued a statement which said “It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India subject to the conditions that:

• Foreign investment(s) in Air India including that of foreign Airline(s) shall not exceed 49 per cent either directly or indirectly
• Substantial ownership and effective control of Air India shall continue to be vested in Indian National.” This step was taken with the aim of encouraging bids for disinvestment in the national carrier by prospective investors. In July 2017, the government had decided to disinvest the airline which accumulated losses of around 50,000 crore apart from a massive debt burden. However, till date the only publicly stated expression of interest has come from India’s largest domestic carrier IndiGo. However, IndiGo is only interested in the international operations of Air India, not the domestic.

The decision to permit FDI up to 49 per cent is driven by the fact that the government had not received significant number of bids. However, with the recent step which is a realistic and sensible move by the Government to attract more interest in the national carrier, the situation is likely to change for the better.