Jet Airways, Etihad Airways deal likely to struggle with 'control' issues in FIPB

Posted By: Religare
Subscribe to GoodReturns

Jet Airways, Etihad Airways deal likely to face hurdles
The proposal of Abu Dhabi-based Etihad Airways to invest Rs 2,058-crore in Jet Airways under the foreign investment promotion board would face a number of complications to get the approval.

The government official seeks more clarity on the issue of 'effective control' remaining with Indian nationals, as per the FDI policy for civil aviation, said the media report.

Moreover, the sources in the government have asked the department of industrial policy and promotion (DIPP) to clarify the term 'effective control'.

As per the FDI policy for civil aviation, foreign airlines and foreign institutional investors can together invest up to 49 per cent in an Indian airline. NRIs are allowed 100 per cent investment in Indian airlines.

Airline sources have clarified that the agreement has been reworked in a manner in which no 'effective control' is transferred to Etihad.

Airline sources further clarified, "In the current form, with Etihad being treated as a 'public' shareholder and getting board seats proportional to its stake, we don't see how there will be any problem. Naresh Goyal is an Indian citizen residing outside India and a board nominated primarily by Indian owners will have complete control over management of the airline."

Moreover, after the transactions are cleared by the regulatory authorities, Naresh Goyal will directly own 51 per cent in the airline while Etihad will own 24 per cent.

Read more about: jet airways india
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'