Modi mulls absorbing $7b of Air India debt to attract buyers

India is considering a plan to exclude more than half of Air India’s $11b of debt in the government’s latest attempt to lure investors to the struggling carrier, people with knowledge of the matter said. PM Narendra Modi’s administration plans to ask proposed investors to take over $4.2b of the airline’s debt, which are backed by the carrier’s aircraft, the people said, asking not to be identified, citing private information. The government may call for the so-called expression of interest as early as December 15, the people said. Modi’s administration, which failed to attract any bidder for the carrier last year, is keen to sell the company to help bridge a widening fiscal deficit following dismal tax collections and cuts to corporate tax rates worth $20 billion. Last week, the government decided to sell its entire stake in the country’s second-largest state refiner, and its biggest shipping company. Unprofitable for a decade with taxpayers bailing it out repeatedly, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. The government has pumped in $7.8b in the last past decade in a bid to keep the carrier afloat, the people said.<br/>