India's Department of Industrial Policy and Promotion (DIPP) has released the country's Consolidated Foreign Direct Investment (FDI) Policy, which specifically excludes Air India (AI, Delhi International) from being majority-owned by foreign carriers, reports the Economic Times of India. The policy makes it clear that the government will not be looking to any of the major international carriers to purchase the ailing national airline.
Other Indian domestic airlines are still permitted to be owned up to 49% by foreign carriers, as long as the substantial ownership and effective control remains with Indians. Indian carriers can, however, be up to 100% owned by non-airline foreign investors.
India's government is keen to sell off its airline amid mounting debts, which must of course be addressed before privatisation can go ahead. Air India's debt currently stands at around INR520 billion (USD8.1 billion).
IndiGo Airlines (6E, Delhi International) is the only Indian carrier that has expressed interest in purchasing Air India, a transaction which would enable it to quickly expand in the international market.
"We see Air India's international operations as a canvas, a new sheet of paper," IndiGo co-owner Rakesh Gangwal said in a finance call. "The biggest asset sitting in there is these negotiated route structures."
However, it may still be possible for foreign carriers to purchase a piece of the Air India pie. Smart Investor reports that the committee which will oversee the airline's sale could still overrule DIPP's pronouncement.
In a related development, Qatar Airways (QR, Doha Hamad International) has denied having any interest in acquiring any part of Air India. The Qatari carrier's CEO Akbar Al Baker told The Hindu this week that rather than invest in Air India, it would proceed with its original plans, i.e. to establish its own airline.
