Now Non-resident Indians (NRIs) can acquire 100 per cent stake in Air India from which the government is disinvesting, Union Minister Prakash Javadekar on Wednesday announced after the meeting of the Union Cabinet.
Earlier, the cap for the NRIs to acquire stake in the national airlines was 49 per cent.
"Regarding the strategic sale of Air India, now NRIs can acquire 100 per cent of stake in the airlines. Earlier it was 49 per cent," Javadekar said.
The government has initiated the process of divesting its share from Air India and is looking for suitable bidders. Earlier attempts by the government at AI divestment had not elicited a response from the potential buyers.
Earlier, clearing any possible hurdle in privatisation of Air India, the Union Cabinet on Wednesday approved 100 per cent FDI in the sale-bound airline by NRIs.
The investment would be allowed through the automatic route. The prospective suitors for the national carrier include the Tatas and London-based NRI business family, the Hindujas.
The government on January 27 invited expression of interest (EoI) from prospective buyers of Air India and two of its subsidiaries. Along with Air India and its low-cost subsidiary Air India Express, the flag carrier's 50 per cent stake in ground-handling arm AISATS has also been put on the block.
The last date for submitting the EoI is March 17. The government will make public the names of short-listed bidders in the first round of bidding by March 31.
In its second attempt to sell Air India lock, stock and barrel, the Narendra Modi government has sweetened the deal by substantially reducing the debt on the books of the airline and offering complete 100 per cent stake in the loss-making airline.
As per preliminary information memorandum (PIM) inviting the EoI, Air India is one of the most extensive flight service providers in India with network coverage of 98 destinations - 56 domestic destinations with around 2,712 departures per week and 42 international destinations with around 450 departures per week.
The airline offers 75 additional destinations through its secondary network of code share operations covered under 25 code share agreements with foreign carriers.
During FY 2019, Air India carried around 22.1 million passengers and recorded operational revenues of Rs 25,508 crore.
While the government has shown its determination to exit Air India this time, many opposition parties have opposed the decision. One of the ruling BJP's key members Subramanian Swamy has also objected to the plan and has warned the government against the move.