The Hindu : AI, IA taken off disinvestment list

Online edition of India's National Newspaper
Wednesday, Apr 16, 2003

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AI, IA taken off disinvestment list

By Our Special Correspondent

NEW DELHI APRIL 15. The Government today decided to withdraw Air- India and Indian Airlines from the disinvestment process in view of the huge investments proposed to be made shortly for fleet acquisition. With this decision, much of the steam has gone out of the disinvestment process. In addition, it has decided to cancel the process for 10 more public sector undertakings, the cases of which are being returned to their administrative ministries.

In the case of the Shipping Corporation of India (SCI), however, the foreign equity ceiling is being raised from 25 to 51 per cent and the entire process of strategic sale is being restarted.

Disinvestment Ministry officials said that the Civil Aviation Ministry was not in favour of continuing with the process of disinvestment of AI and IA as the fleet acquisition plans running into thousands of crores of rupees were due to be implemented soon. In such a scenario, it did not make sense to go ahead with privatisation.

According to the Disinvestment Minister, Arun Shourie, who was briefing newspersons after a meeting of the Cabinet Committee on Disinvestment (CCD), in any case "no work was going on'' for these two public sector companies. He said: "They have been taken off the list for disinvestment."

Regarding the SCI, Mr. Shourie said the lukewarm response to strategic sale was attributed to the 25 per cent ceiling on foreign direct investment (FDI). Since 100 per cent FDI was already allowed in the shipping sector, the CCD felt the ceiling could be raised to 51 per cent. In view of the changed terms, the process would, however, have to be restarted. Replying to a question, he said the existing two bidders for the company were Essar and Sterlite Industries.

The only new major public sector company for which the CCD has cleared disinvestment is the fertilizer giant, Rashtriya Chemicals and Fertilizers (RCF). It has decided to reduce the government equity from 92.5 per cent to 51 per cent through strategic sale. Similarly, it is proposed to begin the process of disinvestment for the National Building Construction Corporation (NBCC).

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