India considers easing foreign control rule to facilitate national carrier sale

An Air India flight takes off from Aéroport du Bourget, Le Bourget, France. Photo: Daniel Eledut

India is considering amending a rule to allow overseas control of local airlines, according to a person familiar with the matter, which may help its indebted national carrier lure a foreign suitor after multiple failed attempts for a sale.

At a meeting in early November, India’s Department for Promotion of Industry and Internal Trade asked the aviation ministry if it would be feasible to change the so-called “substantial ownership and effective control” clause, the person said, asking not to be identified as the details aren’t public.

The rule mandates that control of an airline always remain in Indian hands, one of several reasons global firms have been wary of bidding for Air India Ltd. Doing away with the “substantial ownership” clause will enable an overseas stakeholder weigh in on major decisions of local airlines. That may lure foreign investors to the Air India sale without forcing the government to go down the politically contentious route of lifting the cap on overseas equity investment.

Currently, foreign airlines are barred from buying more than 49% in a local carrier, and foreign investors, other than airlines, need government approval to buy a stake bigger than 49%.

An email to the DPIIT was unanswered. A representative for the aviation ministry didn’t immediately respond to a request for comment.

Finance Minister Nirmala Sitharaman in her budget speech in July had said Prime Minister Narendra Modi’s government will look into suggestions of opening up sectors including aviation to more foreign investment. It has already eased rules in a number of areas such as retail, manufacturing and coal mining.

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.