Cabinet amends FDI policy, allows NRIs to own 100% stake in Air India

New Delhi: The Union Cabinet, chaired by the Prime Minister, Narendra Modi, has allowed non-resident Indians (NRIs), who are Indian nationals, to own 100% stake in Air India. As per the present FDI Policy, 100% FDI is permitted in scheduled air transport service/domestic scheduled passenger airline (automatic up to 49% and government route beyond 49%). However, for NRIs, 100% FDI is permitted under automatic route in scheduled air transport service/domestic scheduled passenger airline. 

Further, FDI is subject to the condition that Substantial Ownership & Effective Control (SOEC) shall be vested in Indian Nationals as per aircraft rules, 1937.  However, for Air India, as per the present policy, foreign investment(s) in it, including that of foreign airline(s) shall not exceed 49%, either directly or indirectly, subject to the condition that substantial ownership and effective control of Air India shall continue to be vested in Indian nationals. 

Therefore, although 100% FDI is permitted under automatic route for NRIs in scheduled air transport service/domestic scheduled passenger airline, it is restricted to be only 49% in the case of Air India.

In light of the proposed strategic disinvestment of 100% of Air India by the Government of India, Air India will have no residual government ownership and will be completely privately owned, it has been decided that with foreign investment, Air India be brought on a level playing field with other scheduled airline operators. 

Above amendment to the FDI Policy are meant to liberalise and simplify the FDI policy to provide ease of doing business in the country. Leading to largest FDI inflows and thereby contributing to growth of investment, income and employment.

FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country. The FDI policy is reviewed on an ongoing basis, with a view to attract larger volumes of foreign investment inflows into the country. Government has put in place an investor-friendly policy on FDI, under which FDI up to 100% is permitted on the automatic route in most sectors/activities.

FDI policy provisions have been progressively liberalized across various sectors in the recent past to make India an attractive investment destination. Some of the sectors include Defence, construction development, trading, pharmaceuticals, power exchanges, insurance, pension, other financial services, asset reconstruction companies, broadcasting, single-brand retail trading, coal mining, and digital media.

These reforms have contributed to India attracting record FDI inflows in the recent past. FDI inflows in India stood at $45.15 billion in 2014-15 and have consistently increased since then. FDI inflows increased to $55.56 billion in 2015-16, 60.22 billion in 2016-17, $60.97 billion in 2017-18 and the country registered its highest ever FDI inflow of $62.00 billion (provisional figure) during the last Financial Year 2018-19.

Total FDI inflows in the last 191/2 years (April 2000- September 2019) are $642 billion while the total FDI inflows received in the last 5 and a half years (April 2014- September 2019) are $319 billion which amounts to nearly 50 % of total FDI inflow in last 19 and a half years.

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The ID Staff

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