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Govt clears 49% FDI in Air India

12 January 2018

The development is expected to clear the way for foreign airlines and Indian carriers to get into tie-ups to jointly invest in Air India.

According to a report from the Economic Times, overseas-based single-brand retailers can now bypass the 30 per cent local sourcing requirement during their first five years of operating in India.

It has now been made a decision to do away with this restriction and allow foreign airlines to invest up to 49 per cent under the automatic approval route in Air India as well, the government said in a statement. These are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country.

Decisions like hasty merger of Indian Airlines and Air India, forcible procurement of huge fleet of aircrafts from foreign companies through direct purchase, were imposed on the company that resulted in an unbearable burden of indebtedness, Sen said.

The relaxation of FDI policy is actually aimed at creating a more investor-friendly climate for foreign companies and in turn boost domestic economic growth and create jobs, experts say. It has now been chose to do away with this provision, thereby allowing FIIs/FPIs to invest in power exchanges through primary market as well, the release said.

Any single-brand retailer-which sell only their own products, such as IKEA or H&M-that opens stores in India has to buy at least 30% of the goods sold from Indian small and medium-size companies. "This should also generate employment and give the Indian consumers access to several worldwide brands", said Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY.

49% stake for Air India, automatic 100% FDI in single brand retail and real estate. However, the government has yet to liberalise norms for multi-brand retail to enable large global retail chains to invest and bring latest technologies to India. It has said that allowing 49% foreign investment is not the best of the solutions for ending the troubles with the National Carrier.

Govt clears 49% FDI in Air India