Come Fly With Us, India Tells Foreign Investors

AirAsia India IPO Coming Soon Positive Signal for Airline Industry

Come Fly With Us, India Tells Foreign Investors

"However, we will keep our options open with respect to the proposed disinvestment of Air India", Singapore Airlines said in an e-mailed statement to the PTI, in response to a query on whether the Singapore-traded company will bid for AI.

The move could increase Air India's attractiveness to foreign airlines, as New Delhi undergoes a process to divest the Star Alliance carrier.

Besides, the Singapore Airlines group has significant number of flights connecting various Indian cities.

This marks a major shift in India's FDI regime, which was earlier silent on the issue and resulted in a situation where the shareholders' agreement between a foreign investor and its Indian partner contained a clause specifying audit by Big Four firms such as KPMG, Ernst & Young, Deloitte or PricewaterhouseCoopers or Indian firms that are part of their network.

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Foreign airlines were allowed to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital in 2012. Vistara CEO Leslie Thng had last week said the airline's promoters had an open mind for AI if it made business sense. However, the same provision was not applicable to Air India.

The government has quietly slipped in a swadeshi move while liberalising the foreign direct investment (FDI) rules by mandating that overseas auditors will have to undertake joint audit if an worldwide investor insists on audit by a global firm, or its Indian affiliate. "This would go against the interests of the domestic manufacturing and also would discourage the future investment in manufacturing in India and therefore would go against the own declared policy of the government of encouraging Make in India", Mahajan said.

The Indian government has approved several amendments to the country's Foreign Direct Investment policy, including one that allows foreign airlines to control up to a 49% stake in state-owned Air India.

Thirdly, he said, it would be prudent to honour the report of the Parliamentary Committee, which has recently recommended against the disinvestment in Air India and has recommended for holding back this decision for the time being.

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