Maharashtra cabinet to buy Air India building for 1,601 crore to convert in govt office

The plan to purchase the famous Air India Building in Nariman Point, which faces the sea, and convert it into government offices was approved by the Maharashtra cabinet on Wednesday. In accordance with the agreement, the state will give Air India Assets Holding Ltd, which was established by the Centre and granted ownership of a number of AI-owned properties prior to selling the airline, Rs 1,601 crore.

The acquisition frees up 46,470 square metres of space throughout the 23-story skyscraper, which is regarded as a landmark in Mumbai.

If all government offices located in private properties are relocated to the Air India Building, officials estimate that the government will save approximately Rs 200 crore in rent each year.

The building is situated on land that Air India was granted a 99-year lease on in 1970. In order to speed up the transaction and allow the state to quickly take ownership of the building, the cabinet has decided to waive some penalties and transfer fees, which are estimated to be equivalent to one-eighth of the market value and must be paid by the leaseholder. An official stated, “Air India had requested and been granted a waiver of this payment as a special case.”

The building was valued at over Rs 2,000 crore, according to Air India officials who told the Maharashtra government when talks first started in 2018. “The state quoted a price of Rs 1,450 crore, but it offered Rs 1,100-1,200 crore because the government had to recover dues from Air India of around Rs 300 crore. Talks did not make headway then. They resumed in 2021 under the MVA but no deal was finalised. In 2022, Maharashtra made a final offer of Rs 1,600 crore which was agreed to by AI Assets Holdings Ltd,” the official said

Deputy Chief Minister Devendra Fadnavis urged Jyotiraditya Scindia, the minister of civil aviation, to accept the state’s bid when they met in 2022. In addition to the Maharashtra government, rumour had it that the Reserve Bank of India was also bidding for the building.

In order to house all of its offices under one roof, Fadnavis had stated that the state administration was experiencing a space crunch and needed to find additional space in addition to Mantralaya and its annexe. “We gave this proposal when I was Chief Minister…that was withdrawn. After that we corresponded again. Currently, both Reserve Bank and Maharashtra government have demanded this space,” he had said in a tweet.

Beset by debt In 2018, Air India also put out tenders for the sale of the 23-story structure, but it did not receive a favourable response.

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