A key cabinet committee on disinvestment has decided to offload 51 percent of government equity in Indian Airlines. IA's shares are to be sold to a strategic partner, financial institutions, public and staff. The joint venture partner will be offered a 26 percent stake and will have a free hand in running the airline. However, the strategic partner will not be allowed to hold more than 40 percent foreign equity, officials says. The partner will not be a foreign airline either.
Government policy bars foreign airlines from taking a stake in a domestic airline company.
Analysts says the government may be keen to ensure that its decision is not perceived as ''a sell-out to foreign interests''. Officials say a shareholders' agreement will be drawn up to define the role of the partner, keeping in view national security and possible emergency requirements. The government will eventually reduce its stake in the airline to just 26 percent. Anil Baijal, managing director of Indian Airlines, said privatization will make the company more competitive and efficient. It is insisting that the buyer or strategic partner should not be an airline.