Prime Minister Narenda Modi’s offer to sell flag carrier Air India attracted zero interest from investors, dealing a blow to his government’s most high-profile privatization plan, aimed at disposing of the money-losing company.

As the deadline to show initial interest expired Thursday, no bidder came forward to propose purchasing 76 percent of Air India Ltd., which was offered along with $5 billion debt, Aviation Secretary R.N. Choubey told reporters in New Delhi. “We were certainly looking forward to better participation than this,” Choubey says.

India will start the next decision process on Air India stake sale in two weeks, Choubey said. Earlier, a person familiar with matters told reporters the government will decide the future course of action in the next few days.

The government will review the sale proposal after the failed attempt and make any changes, if needed, Economic Affairs Secretary Subhash Chandra Garg said separately.

The failure is a set back to Modi’s effort to burnish his credentials as a reformist, trying to steer the state away from running businesses, ahead of national elections due next year. The lack of interest also means the government is stuck with an enterprise that has survived on taxpayer money for the past decade, ever since its merger with another state-run carrier Indian Airlines.

Interested parties balked at the terms when the government made it clear that it didn’t wish to sell Air India in parts. IndiGo, the nation’s biggest airline and an early suitor, pulled out in April this year. Some media had reported that Singapore Airlines Ltd., Qatar Airways Ltd. and conglomerate Tata Group were potential bidders, but none of them showed interest before the deadline expired.

The finance ministry, while announcing it would sell 76 percent of Air India, also said the buyer needs to absorb two-thirds of the airline’s $7.8 billion debt.

Air India’s fleet includes more than 100 Boeing Co. and Airbus SE aircraft that make more than 2,300 local flights weekly to 54 airports. It has 2,543 landing slots at airports including New York, London, Paris and Tokyo.

(Updates to add Aviation Secretary comment in second, third paragraphs.)

 

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This article was written by Siddhartha Singh, Shruti Srivastava and Anurag Kotoky from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: India has failed to secure any bidders for Air India. Bloomberg