NEW DELHI – India greenlighted foreign airlines to invest up to 49 percent in debt-ridden state carrier Air India, following a cabinet meeting on Wednesday.
So far, foreign companies were barred from investing in Air India and could only invest up to 49 percent in private carriers.
“It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 percent under approval route (of the government) in Air India,” a government statement said.
The decision will expedite Air India’s divestment process while ensuring substantial ownership and effective control of the carrier remain in Indian hands.
The Indian government had approved in June 2017 a strategic divestment plan for Air India and five of its subsidiaries, which had generated interest among Indian low-cost carrier IndiGo and others.
The Cabinet also approved the creation of a panel to decide on how to absorb the unsustainable debt of the airline, estimated to be around $7.7 billion.
The panel will also examine the bids, the cost of the divestment or de-merger, and subsequent strategic divestment of the three subsidiaries that are currently profitable.
During the 2016-17 financial year, New Delhi had injected over $380 million into Air India as part of a plan approved by the previous government to infuse $4.65 million into the company until 2021.