Slight hiccup to AirAsia-Tata deal seen

NEW DELHI: India's Planning Commission deputy chairman Montek Singh Ahluwalia has said, inter-ministerial differences would be sorted out, paving the way for Tatas to set up an airline company in collaboration with Malaysian budget carrier, AirAsia.

"I don't know what the detailed differences are. I am sure they will be sorted out.

"If Tatas and an international airline want to set up an Indian airline, they should be allowed to, as long as the latter holds up to 49 per cent equity.

"The intention of the policy as far as I know, is quite clearly that they should be allowed to do so," The Economic Times quoted Ahluwalia as saying.

The Foreign Investment Promotion Board (FIPB) on March 6 cleared the Malaysian budget carrier's bid to launch an airline in India by joining hands with Tata Sons.

But, the civil aviation ministry then, sought further clarity on the Foreign Direct Investment (FDI) policy in aviation, particularly on whether a foreign airline could invest in a new venture.

"There are some procedural problems... The notification says (investment by a foreign airline in) an Indian carrier. So they (investor) have to follow the procedure because the Cabinet took a decision, following which the Commerce Ministry issued the notification," Civil Aviation Minister Ajit Singh had said.

AirAsia has announced it would set up a 49:30:21 joint venture with Tata Sons and Telstra Tradeplace of Indian investor Arun Bhatia to launch the new airline.

The Finance Ministry and Department of Industrial policy and Promotion officials have said the FIPB clearance was granted in accordance with the policy which allows up to a 49 per cent FDI by a foreign carrier in an Indian airline company.

The AirAsia JV now has to approach aviation regulator, the Directorate General of Civil Aviation (DGCA) for further clearances and a scheduled air operator's permit, which allows an airline to undertake flying operations.

Meanwhile, in a related development, AirAsia and Tatas have received the approval of India's Ministry of Corporate Affairs (MCA), for the name of the Indian JV to be called AirAsia (India) Pte Ltd.

A report in The Hindu said the name of the new company had been registered in the state of Maharashtra and the approval was granted by the MCA earlier this month.

The company is now in the process of incorporating itself in India and completing other formalities of submitting the required documents and certificates with the Ministry.-- Bernama