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In a move which is likely to smoothen the divestment of Air India, the Ministry of Finance issued a Gazette notification on Monday amending the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
“The only major change with regard to the Air India disinvestment is with regard to OCI card holders who earlier could and now cannot invest 100 per cent in Air India. Also, now NRIs can invest 100 per cent in the flag carrier,” Vinamra Longani, Head of Operations, Sarin & Co., a law firm specialising in aircraft leasing and finance said after the Gazette was released.
He added that as per the amendments, the Reserve Bank of India (RBI) has been vested with the sole power to issue/interpret the rules in this regard. Previously, it was required to do so in consultation with the Central Government.
On March 4 this year, the Cabinet approved a policy to permit foreign investment up to 100 per cent by those Non Resident Indians who are Indian Nationals in Air India through the automatic route.
On July 16, Hardeep Puri, the Minister of State for Civil Aviation had said that the divestment of Air India was still on the cards.
“Privatisation is not only necessary but leaves us with no option for the simple reason that airlines the world over were under strain in the pre-Covid time and the pandemic has introduced a new element. We have to face reality. Even if Air India wants to be dependent on the government, the government may not be in a position in view of the other demands being made on it in the current situation, like providing measures for relief to vulnerable sections. We do not have a choice, we have to privatise Air India,” the Minister said without getting into details on entities interested in acquiring the state-owned airline.
The government hopes to receive expressions of interest from prospective bidders for Air India by August 31 this year.
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