Cabinet approves Direct Foreign Investment Policy in Civil Aviation

In the case of Air India Limited, the Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved amendment in the existing FDI policy to allow up to 100 percent foreign investment by automatic route to NRIs who are citizens of India.

As per the current FDI, 100 percent FDI is permitted in scheduled air transport service / domestic scheduled passenger airline by automatic route (up to 49 percent through automatic and 49 percent through government).

However 100% FDI is permitted for NRIs under automatic route in scheduled air transport service / domestic scheduled passenger airline. But the condition is that adequate ownership and effective control (SOEC) will be vested in Indian citizens as per the Aircraft Rules 1937.

However, as per the extant policy for Air India, no more than 49 per cent foreign investment in Air India Limited is permitted either directly or indirectly and is subject to the condition that adequate ownership and effective control in Air India Limited Be vested in Indian citizens.

Therefore, in case of Air India, it is limited to 49 per cent, even though 100 per cent FDI is allowed under automatic route for NRIs in scheduled air transport service / domestic scheduled passenger airline.

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