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Cabinet tweaks AI’s FDI norms to attract foreign buyers (Roundup)
New Delhi, Jan 10 (IANS) To attract foreign bidders and expedite the strategic divestment of Air India, the Cabinet on Wednesday decided to allow Foreign Direct Investment (FDI) up to 49 per cent in the flag carrier.
Accordingly, the national carrier has been brought at par with other domestic airlines which are allowed to attract foreign capital. The decision effectively expands the “universe of bidders” that the government hopes to attract for the airline’s strategic divestment.
The decision to allow FDI into the flag carrier was taken by the Union cabinet in its meeting here that okayed liberalisation and simplification of the FDI policy in several other sectors also.
The present rules allow foreign airlines to invest in Indian airline companies up to a limit of 49 per cent of their paid-up capital, which is, however, not applicable to Air India.
“It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India subject to the conditions that foreign investments in Air India, including that of foreign airlines, shall not exceed 49 per cent either directly or indirectly,” an official release said here, following the Cabinet meeting.
“Substantial ownership and effective control of Air India shall continue to be vested in Indian national,” it added.
Welcoming the decision, industry body CII’s Director General Chandrajit Banerjee said: “Foreign airlines have been allowed to invest up to 49 per cent in Air India with approval. This is expected to bring some capital to support a turnaround in the national carrier.”
Albert Tjoeng, Assistant Director, Corporate Communications, Asia Pacific at International Air Transport Association (IATA), said: “The amendment in the FDI policy is a step in the right direction – it removes the exemption that had been prevalent in the policy which is related to a single airline.”
“At the same time, it is important that the government ensures that airlines in India have the most conducive operating and regulatory environment to compete effectively.”
Industry observers opined that the move will attract foreign bidders including foreign airlines to the divestment process.
“The decision will bring Air India at par with other domestic carriers which are allowed to attract foreign capital,” Dhiraj Mathur, Partner and Leader (Aerospace and Defence) with PwC India, told IANS.
“This will increase competition and the overall participation of bidders in the divestment process. A sensible and welcome decision.”
According to Peeyush Naidu, Partner, Deloitte Touche Tohmatsu India: “It is a fine-tuning of the FDI policy that extends norms that existed for other players for Air India as well.”
“Foreign players can now come in individually or with other Indian partner to participate in the divestment process when ever it takes-off and get a significant stake.”
Independent aviation expert Amrit Pandurangi said: “Air India is not an easy transaction… so 49 per cent is good, but may not be good enough to make it attractive.”
“They need to first sort out a number of issues on Air India’s financial debt, people-related issues.”
Currently, a ministerial group — Air India-specific Alternative Mechanism — headed by Finance Minister Arun Jaitley is looking into the modalities to divest loss-making Air India. The group has been mandated to decide on key issues such as treatment of Air India’s debt and hiving-off of its assets.
Last month, Minister of State for Civil Aviation Jayant Sinha had announced that British consulting multinational EY has been appointed as transaction advisors to aid the government in the strategic divestment of Air India.
Making the announcement, Sinha said the Air India stake sale would most likely be an offering for an integrated airline through the bidding process “and both domestic and international operations will be divested as one entity”.
In September, the Department of Investment and Public Asset Management had invited bids for the role of advisors to guide the government on the financial and legal issues associated with the strategic disinvestment.
The airline, which is under a massive debt burden of Rs 50,000 crore, had posted an operating profit of Rs 105 crore in 2015-16, and is expected to report an improved operating profit margin for the last fiscal.
The national carrier got a new lease of life in April 2012, when the then UPA government approved a Rs 30,000-crore turnaround and financial restructuring package spanning up to 2021.
–IANS
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.