EXCLUSIVE | Jayant Sinha Interview: Govt open to retaining minority stake in Air India

作者:amantha    發表日期:2019-08-15 10:03:32

The government is open to retaining a minority stake in Air India even as it pursues sale of a strategic holding in the loss-making carrier, Moneycontrol learnt today in an exclusive interview with Jayant Sinha, union minister of state for civil aviation.

The Union Cabinet on Wednesday allowed foreign direct investment of up to 49 percent in Air India. This decision means that foreign airlines too can buy a stake in the fully state-owned company under the total FDI limit of 49 percent. The foreign investor will need the approval of the government. FDI of up to 49 percent is already allowed in private Indian airline companies under the automatic route.

“So for instance, just to make it perfectly clear. Suppose the government were to disinvest 60 percent of Air India. If we have disinvested 60 per cent of Air India, 60 percent would be with the private sector, 40 percent would remain with the government. OK. Now we have said that no more than 49 percent could be in foreign hands. So 49 percent of the 60 percent, for instance, could be with the foreign player, then 11 per cent could stay with an Indian player and 40 per cent could stay with the government. So the 51 percent would be met,” Sinha told Moneycontrol.

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The government has so far not clearly specified how much stake it would sell in Air India other than the fact that it wanted to sell a strategic stake. Whether the government would exit the company or retain a minority share has not been very clear so far. Sinha’s statement indicates the government could look at retaining a minority stake with a majority stake of not more than 49 per cent going to a foreign player.

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“So, on one hand we are saying that this is a strategic disinvestment which exceeds 51 percent and at the same time we are saying FDI cannot exceed 49 percent. So they are two different things. You cannot combine the two together in a somewhat jumbled-up way,” he said.


Sinha said the stake sale by the government should not take more than six to eight months with the legal closing and transfer of assets taking another few months.

So far, Interglobe Aviation, which runs IndiGo Airlines, is the only airline company to have officially expressed its intent to buy the national carrier.

Air India made a loss of Rs 4,310.65 crore in 2015-16, adding to its Rs 6,280.42 crore loss in the previous financial year. The airline, which is completely owned by the government, is weighed down by a debt of around Rs 52,000 crores.

Divestment of stake in Air India is a hot potato because it is likely to rile the unions and is being driven by no less than the Prime Minister’s Office. The government has appointed all the necessary advisors to value the airline and advise it on the stake sale.

It is almost a given that the government will have to absorb much of Air India’s massive debt to entice enough interest from any private sector company though Sinha was non-committal on the quantum of debt the government would be willing to absorb. He said an audited mechanism, headed by Finance Minister Arun Jaitley, would take a decision on that based on the advice coming from the transaction advisor Ernst & Young.

(The video of this interview, and the full transcript, will run later today.)