Government announces plan to sell entire stake in Air India, sets terms for sale

India plans to sell its entire shares in Air India to sell its national career after an initial attempt sell its majority stake in the airline failed to draw a single bid in 2018 .A document inviting expressions of interest in  Air India which will be released on Monday would sell a 100 per cent stake in the career which operates both domestic and international routes. The document set March 17^th as the deadline for submissions of initial expressions of interest  and any bidder would have agreed to assume roughly 3.6 billion dollars in debt along with other liabilities.

“The Government of India (GOI) has given ‘in-principle’ approval for the strategic disinvestment of AI (Air India) by way of the transfer of management control and sale of 100 per cent equity share capital of AI held by GOI which will include AI’s shareholding interest of 100 per cent in AIXL (Air India Express Limited) and 50 per cent in AISATS (Air India SATS Airport Services Private Limited),” the document read.

One of India’s largest conglomerates, Tata Group, may also not participate, according to recent reports. Although there has been no definitive public statement from Tata Group yet,  a report cited sources who said Tata is “unlikely to consider a bid for the state-run carrier as the government’s terms are just too onerous.” The report also mentioned  that “a lack of interest from Tata is likely to put pressure on the government to rethink its terms or even the structure of the sale.”

The government said that the the substantial ownership and effective control of Air India would have to remain vested with an Indian entity following the sale , limiting the scope for any foreign bidders interested in the asset. In 2018 India tried to sell its 76% stake in Air India and offload about $5.1 billion dollars of its debt , terms that potential buyers at time viewed as too onerous .

The successful privatization of Air India, in light of all of these complexities and obstacles, would certainly boost Prime Minister Narendra Modi’s image as a reformer, particularly if such a feat is achieved by the December deadline and ahead of the 2019 General Election. However, given the complexities of the deal, and the lack of participation from the likes of IndiGo, Jet Airways, and Tata, concluding such a deal by the end of the year seems impossible.