Indian Union Minister of Heavy Industries and Public Enterprises Prakash Javadekar announced on Wednesday that Non-resident Indians (NRIs) can acquire up to 100 per cent equity in public carrier Air India.
"FDI Policy amended to permit foreign Investments in M/S Air India Ltd by NRIs who are Indian nationals, up to 100 per cent under automatic route. Earlier only 49% was available for sale to NRIs in Air India. Now they can purchase 100%," he said after a Cabinet meeting.
The decision comes at a time when the government is looking to sell a 100 per cent stake in the national carrier.
Under the Substantial Ownership and Effective Control (SOEC) framework, which is followed in the airline industry globally, a carrier that flies overseas from a particular country should be substantially owned by that country's government or its nationals.
Allowing 100 per cent investment by NRIs in the carrier would not be in violation of SOEC norms as NRI investments would be treated as domestic investments.
Till now, NRIs could acquire only 49 per cent in Air India. Foreign Direct Investment (FDI) in the airline is also 49 per cent through the government approval route.
On January 27, the government came out with a Preliminary Information Memorandum (PIM) for Air India disinvestment. It has proposed selling 100 per cent stake in Air India along with budget airline Air India Express and the national carrier's 50 per cent stake in AISATS, an equal joint venture with Singapore Airlines.
This is the second attempt by the government in as many years to divest Air India.