The Foreign Investment Promotion Board (FIPB) on Monday cleared Abu Dhabi-based Etihad Airlines buying 26 per cent stake in Jet Airways for Rs 2,058 crore with some conditions.
FIPB cleared the deal with some riders, sources attending the FIPB meeting said.
The conditions include Jet seeking prior Government of India approval for any changes in the Share Holders Agreement (SHA) with Etihad. Also, any arbitration would have to be under Indian law and not English law as proposed in the revised SHA submitted by Jet-Etihad to FIPB.
Once Jet-Etihad agree to the conditions, the deal would go to the Cabinet Committee on Economic Affairs (CCEA) for approval.
The FIPB had in June deferred a decision on Jet's proposal to sell a 24 per cent stake to Gulf-based airline. The deferral for the Rs.2,058 crore ($379 million) deal had come as SEBI and fair trade watchdog Competition Commission of India (CCI) sought clarity on some of the sticking issues like the number of Indian directors on board and the holding pattern of the merged entity. Some MPs have alleged that the government gave huge concessions to Abu Dhabi by granting it 40,000 seat per week additional capacity as a quid-pro-quo to facilitate a private party deal.
Ethiad has already agreed to reduce the number of directors it will have on the board of domestic carrier to two, leaving 'effective control' with the Indian promoters. However, there will be no change in the shareholding pattern, with Etihad picking up 24 per cent, key promoter Naresh Goyal holding 51 per cent and the remaining 25 per cent with others, including institutions and individuals. (With Agency Inputs)