India’s sole domestic carrier Air India could go to local investors as top echelons in the government are not very keen to hand it over to foreign carriers as part of its strategic disinvestment plan.
According to senior officials, the Niti Aayog in its recommendations made to the Prime Minister’s Office (PMO) advocated 100 per cent strategic disinvestment in Air India.
However, it wanted both the domestic and private airlines to participate in the bidding process.
The PMO is learnt to have suggested that Air India should be owned and run by domestic investors only and is, therefore, pushing ahead with the plan.
Foreign airlines can own up to 49 per cent stake in Indian Joint Venture carriers.
Singapore Airlines and Tata Group own up to 49 per cent in Vistara and Air Asia India respectively, while Etihad has a 24 per cent stake in Jet Airways.
Officials said Air India’s accumulated debt is estimated to be around Rs 50,000-55,000 crore.
The government says that half of it could be written off by the Centre, while the remaining has to be borne by the buyer.
The debt includes around Rs 21,000 crore of aircraft related loans and Rs 8,000 crore of working capital.
Officials said that Niti Aayog also recommended that all the existing assets of Air India that includes some of the prime properties in Nariman Point in Mumbai could be hived off into a separate company before offering 100 per cent equity to a strategic partner.
Niti Aayog Vice-Chairman Arvind Panagariya told Business Standard in an interview earlier this month that the Aayog in-principle is not opposed to strategic disinvestment in Air India, but the timing of the same has to be decided by the government.
“The approach on disinvestment we have taken is to go for low-hanging fruits,” Panagariya said.
Finance Minister Arun Jaitley expressed his full support for strategic disinvestment in Air India few days back.
