Who is likely to benefit more from the Air India divestment; the Tata group or the government of India?

Actually, both should benefit from the deal. For the Tatas, they have long coveted a leadership position in aviation and Air India offers the best option. For years now, Indigo has dominated the Indian skies and Air India can help them combat this challenge. If Tatas combine Air India, Vistara and Air Asia, they get a market share of 25%. It puts the Tatas in a much better position vis-à-vis competition with its a low-cost plus full-service proposition.

OF course, it is good news for the government too as they anyways had no business to be in business. It also sets a template for strategic sale of assets. For the last few years, the Air India sale never happened due to bad pricing or bad asset sharing. That has been overcome. More importantly, GOI has to make a success of the divestment plan if it has to reach the target budget deficit for the current year with the divestment target at Rs.175,000 crore.