The government has decided on strategic disinvestment of the loss-making Air India, which is staying afloat on taxpayers' funds, and a ministerial panel is working on the modalities.

New Delhi: Taking forward the process for Air India divestment, the government on Thursday invited applications from investment bankers, law firms and other entities to act as advisers for strategic stake sale of the flag carrier.

The government has decided on strategic disinvestment of the loss-making Air India, which is staying afloat on taxpayers' funds, and a ministerial panel is working on the modalities.

Applications have been sought for engaging up to two advisers and a legal adviser for the "strategic disinvestment of Air India and its subsidiaries/ joint venture", according to two similarly-worded public notices issued by the Finance Ministry.

"The Government of India has in-principle decided to consider the disinvestment of the AI Group as a whole or its constituents fully or part thereof through strategic sale with transfer of management control," the notices said.

It is looking for reputed investment bankers, merchant bankers, financial institutions and banks for providing advisory services and managing the strategic disinvestment process.

The government "requires the services of reputed law firms with experience and expertise in mergers and acquisitions/ takeovers/strategic disinvestment/ private equity transaction to act as legal adviser and assist government in the process," one of the notices said.

Applications have to be submitted by 12 October.

The notices for Expression of Interest have been issued by the Department of Investment and Public Asset Management.

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. The ten-year bailout package began from 2012.

So far, the embattled carrier has received around Rs 26,000 crore under the package.

The Cabinet Committee on Economic Affairs (CCEA) gave its in-principle nod for the strategic disinvestment of the airline -- which has a debt burden of more than Rs 50,000 crore -- in June this year.

Subsequently, an Air India-specific alternative mechanism was set up to guide the process.

The ministerial group is looking into treatment of Air India's unsustainable debt, hiving off of certain assets to a shell company, demerger and strategic disinvestment of three profit-making subsidiaries, among other aspects.

Air India is also planning to take short term loans worth up to Rs 3,250 crore to meet "urgent working capital requirements".