Non-resident Indians (NRIs) can bid for 100 per cent shares owned by the government in national carrier Air India as Union Cabinet on Wednesday approved changes in Foreign Direct Investment (FDI) norms.

“The Union Cabinet has approved to amend the extant FDI Policy to permit Foreign Investment (s) in Air India Ltd by NRIs, who are Indian Nationals, up to 100 per cent under automatic route,” a government statement said.

This decision has been taken at a time when last date to submit ‘Expression of Interest (EoI)’ to participate in strategic disinvestment of Air India is March 17.

It is believed that this decision has been taken to make the disinvestment process more attractive as previous attempts to attract suitors did not elicit any response.

As per the present FDI policy, 100 per cent FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline. Automatic route (which requires only informing the RBI after the process and no government approval) to be adopted for FDI up to 49 per cent, while beyond that the route approval from the concerned ministry or Cabinet Committee on Economic Affairs (CCEA) will be required.

Existing policy prescribes 100 per cent FDI for NRI in the scheduled airlines, but it can not be more than 49 per cent for Air India. Also, rules say, in case of FDI, Substantial Ownership and Effective Control (SOEC) should be with Indian nationals. Now, with this change in norms, 100 per cent investment by NRIs will be treated as domestic investment and thus there will be no violation of SOEC.

Addressing media, Information and Broadcasting Minister Prakash Javadekar termed this a ‘milestone decision’.

The airline will come under private hands but it will continue to provide services to passengers and it would also increase investment opportunities, he said.

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