Tata Sons’ board has given an in-principle approval for a fresh capital infusion of more than Rs 10,000 crore into Air India, marking one of the largest funding commitments to the airline since the Tata Group acquired it for Rs 18,000 crore in 2021, according to a report by The Times of India.
The approval is subject to conditions. People familiar with the matter said Air India and other Tata Group investee companies will have to present a detailed business case each time they seek fresh capital. The funding will be released only after the proposed investment is justified on business grounds.
The decision was taken during a Tata Sons board meeting in June chaired by N Chandrasekaran and attended by Tata Trusts chairman Noel Tata and vice-chairman Venu Srinivasan. Under Article 121A of Tata Sons’ articles of association, investments above Rs 100 crore require majority support from Tata Trusts’ nominee directors, according to people familiar with the matter.
The latest approval comes more than a year after Tata Sons paused equity injections into Air India. The airline reported a loss of Rs 22,238 crore in FY26, more than twice the loss recorded a year earlier. Its funding needs have also increased as it continues to implement a multi-year transformation programme.
Air India’s funding needs face closer scrutiny
Air India’s financial performance has emerged as a growing concern within Tata Sons. Earlier this year, Noel Tata questioned the airline’s losses and sought greater clarity on the Tata Group’s strategy and allocation of capital.
At a Tata Sons board meeting in May, Air India presented its financial performance and capital requirements. According to an Economic Times report, Noel Tata called for course correction at Air India and other loss-making newer businesses.
Tata Sons’ FY26 report showed its investment in Air India at Rs 22,618 crore, unchanged from the previous year. This indicated that no additional equity had been injected during FY26. Instead, Air India has relied on borrowings and other financing, taking its outstanding debt to around Rs 40,000 crore across 11 lenders.
State Bank of India has the largest exposure to the airline at around Rs 18,500 crore, followed by Bank of Baroda with about Rs 5,938 crore.
Air India has also approached its shareholders for additional funding as its turnaround programme has taken longer and required more capital than initially anticipated.
Singapore Airlines weighs further investment
Singapore Airlines is separately considering whether to participate in Air India’s next capital raise. Air India has sought around $1.5 billion in fresh equity from its two shareholders, Tata Sons and Singapore Airlines, as losses and the cost of the turnaround have increased.
Singapore Airlines has said it will carefully assess any request for additional capital, taking into account the wider funding requirements of the group and Air India’s strategic direction. The final decision rests with its board rather than its management.
The issue has also attracted attention in Singapore because Singapore Airlines is majority-owned by state investment company Temasek. Temasek has supported SIA’s investment in Air India as a long-term strategic opportunity, despite continued concerns about the airline’s financial performance and funding needs.
Tata Sons board set for September 17 meeting
The latest funding approval comes ahead of the next Tata Sons board meeting scheduled for September 17. Tata Trusts, excluding Sir Ratan Tata Trust, is scheduled to meet on September 11.
Sir Ratan Tata Trust has been barred from conducting board meetings since May pending an inquiry into alleged violations of the Maharashtra Public Trusts Act. However, people familiar with the matter said the restriction does not affect the voting rights of Tata Trusts’ nominee directors on the Tata Sons board.
The nominee directors appointed under Article 104B have their primary fiduciary responsibility towards Tata Sons, while their voting rights under Article 121A remain intact unless they resign or are formally removed.
Capital discipline remains a key issue
The proposed Air India funding also comes amid wider differences between Noel Tata and N Chandrasekaran over the performance of Tata Group’s newer businesses and the allocation of capital.
Noel Tata had raised concerns about losses at Air India and BigBasket and called for tighter capital discipline. Discussions over Chandrasekaran’s reappointment as Tata Sons chairman were subsequently deferred, with the group’s strategy and the performance of newer businesses forming part of the broader deliberations.
Chandrasekaran later announced that he would step down as Tata Sons chairman when his current term ends on February 20, 2027. The Tata Sons board is expected to begin the succession process during its September meeting.
Tata Sons currently owns 73.8% of Air India, while Singapore Airlines holds 24.7% and employees own around 1.5% through SBICAP Trustee Co.
If the entire proposed funding requirement is raised through equity and Singapore Airlines seeks to maintain its existing stake without dilution, the airline would need to invest approximately Rs 3,350 crore, or about $351 million.
The proposed capital infusion therefore represents a major financial commitment by Tata Sons, but the requirement for Air India to establish a clear business case before receiving funds signals a stronger focus on capital discipline as the group evaluates the airline’s long-term turnaround.
