As per the existing policy, foreign investment up to 100 per cent was allowed for scheduled and non-scheduled operators and foreign airlines could invest up to a limit of 49 per cent of their paid up capital.
Expressing similar views, Wildcraft cofounder Siddharth Sood said: "The consumer in the country will be direct beneficiary of this move as they will have access to the brands hitherto unavailable in the country as it will be much easier for the worldwide brands to set up shop in India".
"Expect a significant interest from foreign airlines though the offer and conditions attached will determine the level of participation in the bids".
Besides allowing 100 per cent FDI in single-brand retail, the Centre also allowed investment up to 49 per cent under approval mechanism in Air India and FPIs and FIIs to invest in power exchanges through primary market.
-And Second is extensive ownership and effective power of Air India shall keep on to be vested in Indian National.
The government in a press statement informed that it has permitted 100 per cent FDI under automatic route for single brand retail trading.
"It has now been chose to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India", it added.
A senior civil aviation ministry official said that allowing FDI in Air India is a "considered decision" and will send out an important message to global investors.More news: Antonio Conte blasts 'senile' Jose Mourinho
Under a turnaround plan approved by the previous UPA regime, Air India is to receive up to Rs 30,231 crore from the government subject to meeting certain performance thresholds.
About Wednesday's cabinet decisions, the CPI (M) politbureau said the step to liberalise FDI in retail trade will have harmful consequences for domestic retail traders and shopkeepers. "Now being in the government, it has hypocritically reversed its position".
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"They are now actually private sector airlines because the private sector can run airlines far better than government running them".
The provision was not applicable to Air India. We have to examine the government's decision closely. Foreign investors, including foreign airlines, do not need prior approval for holding up to 49 percent in an Indian carrier.
"Interesting-Commandeer a low valuation report, sell Air India to a crony oligarch who in turn disinvests 49 per cent to a foreign airline at hefty premium", Congress spokesperson Manish Tewari said in a tweet.
After completion of this 5 year period, the SBRT entity shall be required to meet the 30 per cent sourcing norms directly towards its India operation, on an annual basis, the release added.
Air India had a total debt of about Rs 48,877 crore at the end of March 2017, of which about Rs 17,360 crore was aircraft loan, and Rs 31,517 crore for working capital.