New Delhi, Dec 4 (UNI) Civil Aviation Minister Praful Patel today said Air India will hit the capital market through issue of initial public offering (IPO) in the second quarter of the next fiscal.
''Air India will bring out its IPO in the second quarter of the fiscal 2008-09,'' Mr Patel told reporters on the sidelines of the three-day India Economic Summit jointly organised by the World Economic Forum and CII.
The Minister said the government may divest 10-15 per cent of its share in the airline, adding that Air India IPO may include four to five per cent ESoPs.
The fund raised is expected to be used for upgradation of its fleet, thereby helping it to competete with the private players.
The Minister also talked about removal of the FDI cap in the aviation sector. ''In the long run, FDI cap in the sector has to go,'' Mr Patel said.
Earlier, media reports indicated that the government is looking at raising foreign direct investment in air cargo, sea-planes, charter airlines and helicopter businesses to 74 per cent from 49 per cent. The sectoral cap of 49 per cent holds true for most aviation sectors.
Mr Patel had made it clear that he wants FDI rules for non-passenger airline businesses to be relaxed but does not want any major changes in the norms for airline FDI.
The rules not only bar majority foreign ownership of scheduled passenger airlines in India but also stops foreign airlines from directly or indirectly owning stakes in local entities.