ABSTRACT
Air India has been the second highest loss making CPSE since 2014–15. Attempts were made for strategic sale of 76% of Air India in 2018 but the terms of condition were such that no bid was received. Again, the government made renewed effort to sell 100 % of Air India in 2020. Number of changes was made to sweeten the deal. A fresh problem came when UK’s Cairn Energy Plc brought a lawsuit in May, 2021 in US District Court which could potentially lead to seizing of Air India’s overseas assets such as airplanes to recover USD 1.72 billion from the Indian government which an international arbitration tribunal had awarded overturning levy of retrospective taxes. To take care of the root cause the Government passed the Taxation Laws (Amendment) Bill 2021 in August 2021 to do away with the contentious retrospective tax law of 2012 which was used to raise tax demands on foreign investors like Vodafone and Cairn Energy. The case of Air India raises questions about its management, and whether it was because of inadequate talent within it, and /or systemic and structural shortcomings. Finally, the Tata Sons won the bid to acquire Air India. It is expected that the transaction would be finalised by the end of December 2021. With the completion of the deal, Air India would be back in the hands of the group which founded it as Tata Airlines in 1932 before it was nationalised in 1953. The privatisation of debt ridden loss making national carrier also lays down model for such other enterprises. We have to appreciate that the process of privatisation is long-drawn and complicated, particularly when the government is simultaneously pursing two tracks, that is, monetisation and privatisation.
