The Union Cabinet on Wednesday announced a major easing of FDI norms for the aviation sector, allowing 100% foreign direct investment into Indian airline operators under the automatic route, even as the talks around selling a stake in the national carrier Air India continue to gather steam. Cabinet approved investment up to 49% under approval route in Air India.
“Foreign airlines allowed to invest up to 49 percent under approval route in Air India,” the statement said. As per the policy, foreign airlines are allowed to invest under government approval route in Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 percent of their paid-up capital. However, the provision was not applicable to Air India, thereby implying that foreign airlines could not invest in Air India.
“It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 percent under approval route in Air India,” it added. This condition was relaxed subject to certain conditions. The statement said that foreign investment in Air India including that of foreign Airline (s) shall not exceed 49 percent either directly or indirectly and “substantial ownership and effective control of Air India shall continue to be vested in Indian National.”
The cabinet also approved 100 percent FDI in construction sector under automatic route. The Union Cabinet reviewed the foreign direct investment (FDI) policy in certain sectors today. The Union Cabinet meeting was headed by Prime Minister Narendra Modi.