FDI caps in different industry

  • October 12, 2021
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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FDI caps in different industry

Subject – Economy

Context – ‘49% FDI cap for Air India to stay’

Concept –

Private Airlines100% FDI
Foreign Airlines49% FDI cap
Foreign investments in Air India49% FDI cap
Indian Nationals investment (including NRI) in Air India100% FDI
  • Foreign investment(s) in Air India Ltd, including that of foreign airline(s), shall not exceed 49 per cent either directly or indirectly except in case of those NRIs, who are Indian nationals, where foreign investment(s) is permitted up to 100 per cent under the automatic route.
  • Also, substantial ownership and effective control of Air India will continue to be vested in Indian nationals as stipulated in Aircraft Rules, 1937.
  • The strategic disinvestment has three specific clauses:
    • One, there will be equity lock-in for one year.
    • Two, the successful bidder will have to ensure business continuity for at least three years.
    • And three, no brand/logo can be sold within the first five years and, even after that, it can be sold to an Indian entity only.

Equity lock-in period

  • A lock-up period is a window of time when investors are not allowed to redeem or sell shares of a particular investment.
  • Lock-up periods are used to preserve liquidity and maintain market stability.
economy FDI caps in different industry