Taking the sale of the loss-making Air India one step further, the Narendra Modi government is looking to open 100 per cent stake of the airline carrier and completely exit the sell-off process.
While the government has made this decision, a panel of ministers will have the final in say in the government's involvement in the sell-off process. The government had earlier started the process but was met with a poor and unfavourable response.
The government had recently restarted the process and bid to sell the entire stake. Niti Aayog had suggested the option during the first sell-off process but the government had put 75 per cent of the stake on sale.
"A general feeling (in the government) is that if people want to have full (control), let them have it. But I will be able to tell you only when a specific decision is taken. My personal view is that I do not see any conflict for the government," Atanu Chakraborty, the secretary of the department of investment and public asset management (DIPAM), was quoted as saying by The Times of India.
The government is looking to close the deal by the end of 2019 and Chakraborty is confident that the sale will be quick because most of the paperwork has already been done during the previous attempt.
To make the sale smooth sailing, Finance Minister Nirmala Sitharaman has said that she will review the Foreign Direct Investment (FDI) in the aviation sector and see if their stake can increase. Through FDI, foreign carriers can currently own up to 49 per cent of shares.
"My understanding is that FDI in aviation is 100 per cent. The cap is again on substantial ownership and effective control (SOEC) guidelines, which is 49 per cent and certain directorships. The second cap is on Air India as a nationally owned carrier. Once it is not nationally owned it will go through 100 per cent so that's a signal in the budget. SOEC is much more complicated because there is some reciprocity, there are a lot of issues involved that the budget does not mention. That's an issue which needs to be grappled with," Chakraborty said.
