Airline foreign control rule may change to help Air India sale

04 Dec 2019

India’s Prime Minister Narendra Modi is debating with his government on whether to give overseas control of Indian airlines in order to help Air India’s debt through foreign investment. 

India’s Department for Promotion of Industry and Internal Trade was in contact with the aviation ministry last month, asking whether the “substantial ownership and effective control” clause could be changed. 

The clause states that Air India must always be controlled by locals. However, by changing the clause, overseas stakeholders would be allowed to help out local airlines in making crucial decisions. 

So far, foreign airlines can only buy 49% of a local carrier, whereas foreign investors would need an approval by the government in order to buy more than the aforementioned percentage. 

During the speech at this year’s budget, Finance Minister Nirmala Sitharaman said that the Prime Minister, together with the government will see how the aviation sector could attract more foreign investment. 

Similarly, the Indian government has already found ways to lead foreign traders to invest in retail, manufacturing and coal mining. 

There was no clarification on what the decision is going to be despite several contacting the DPIIT and the aviation ministry.