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Jet-Etihad deal: Finance Ministry raises questions on effective control

The Foreign Investment Promotion Board (FIPB) has also sought more clarity on the effective control and ownership of the proposed joint venture in the 2,058-crore Jet- Etihad deal.

BT Online Bureau | July 11, 2013 | Updated 11:25 IST

Following in footsteps of the market regulator, Securities and Exchange Board of India (Sebi), the Foreign Investment Promotion Board (FIPB) has also sought more clarity on the effective control and ownership of the proposed joint venture in the 2,058-crore Jet- Etihad deal .

While the FIPB has sought more transparency on whether the rules concerning effective control would be followed once the deal fructifies, the Finance Ministry has also written to SEBI for a report on the Jet-Etihad deal, official sources said on Wednesday.

According to these sources, the FDI holding, including the NRI investment by Jet Chairman Naresh Goyal, would be 88.57 per cent.

Once the deal involving the Abu Dhabi-based airline picking up 24 per cent stake in Jet at a price of Rs 2,058 crore is finalised, the Indian carrier would have a shareholding pattern with Goyal controlling 52 per cent, Etihad 24 per cent, Jet's parent company Tailwinds and other foreign investments holding 14 per cent, they said.

Keeping this in view, the FIPB has sought further details on the shareholder agreemnt on the post-deal status.

The FIPB has also asled for a clarity from Department of Industrial Policy and Promotion (DIPP) on FDI policy in aviation and whether the 49 per cent FDI sectoral cap in civil aviation includes NRI investment.

The Prime Minister's Office (PMO) on July 2 came out with a statement rebutting reports about objections to the deal raised by senior BJP leader Jaswant Singh, CPI's Gurudas Dasgupta, Dinesh Trivedi (Trinamool Congress) and Janata Party chief Subramanian Swamy, each of whom had shot off separate letters to Prime Minister Manmohan Singh.

Reacting to the reports, Civil Aviation Minister Ajit Singh accused the opponents of playing politics, saying "elections are coming. Why are they opposing the Food Security Bill? They agree with it but are still opposing it. They are not willing to get the Land Acqusition Bill passed. They don't want to see any actions, which may improve the economy, the aviation sector or anything as they think it will adversely affect them in elections.

Singh said the Jet-Etihad deal was between two private companies. So, "they have to go through Indian regulatory agencies, they have to get SEBI's clearance, they have to get FIPB's clearance, then it will come before the Cabinet Committee on Investments."

On the MPs raising objections, he said "basically they are long on politics and short on facts....I mean any foreign investment has to go through whatever Indian regulatory environment is there."

Defending the enhancement of bilateral air traffic rights between India and Abu Dhabi, the Minister said it would increase the connectivity of passengers both in domestic and and international sectors.

With PTI inputs

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