India’s national carrier Air India is seeking a loan of over Rs 1,100 crore to upgrade and modify two Boeing aircrafts scheduled to be acquired next month, to cater to the VVIPs, according to official documents.
In a tender document, they asked for a bridge loan of USD 180 million, which at the current exchange rate, comes to Rs. 1,160 crores. The two Boeing 777-300 ER aircraft are to be delivered in January 2018.
The two Boeings are supposed to cater to the President, Vice President and the Prime Minister of the country. It is to be noted that Air India is already under a Rs. 50,000 crore debt.
What they said
“Government of India has indicated that they would issue its guarantee for the financing cost of modification of the two B777-300 ER aircraft for a period of 12 months or less,” the document issued last week said, according to Hindustan Times.
The loan would be availed from a period of January 2018 to April 2018. The first instalment to be paid is USD 135 million in the month of January. The remaining money would be acquired at a three-month instalment of 15 million each in February, March and April.
According to the airline, no commitment fee would be paid to the lender for the USD 180 million loans. “Prepayment/ short closure of the loan should be allowed without any extra cost to Air India as the loan would be repaid as soon as the funds are made available by Government of India,” it added
“The Indian Income Tax Act imposes withholding tax on interest payments to lenders outside India. The rate of withholding tax on interest payments will be considered in the financial evaluation of the offers to determine the all-in cost of your offer,” the document said.
Once again, last month they sought a loan of USD 535 million to finance the acquisition of three Boeing planes, out of which two would be used to ferry VVIPs. According to the exchange rates, the amount is about Rs 3,450 crores.
Air India is already in a debt of Rs.55,000 crore and on top of that demanding a loan of Rs. 1,160 crore for VVIPs is probably not justified.