FIPB defers nod to Jet-Etihad deal

The Foreign Investment Promotion Board (FIBP) has deferred its decision on the Rs 2,000 crore stake sale deal between Jet Airways and the Abu Dhabi-based Eithad Airways, saying it needs more details on ownership and effective control of the entity.

“It has been deferred, because we need more details of effective control and ownership,” economic affairs secretary Arvind Mayaram said on Friday in New Delhi after an hour-long meeting of the finance ministry’s panel on foreign direct investment proposals.

The government reportedly is looking for more clarity on the effective control remaining with the Indian nationals, as per the FDI policy.

Currently 75% stakes are being owned by non-resident Indian, Naresh Goyal, while it sold 24% stakes to the Gulf carrier Etihad in April.

The FIPB meeting was earlier slated to happen on Tuesday and was postponed till June 14. Once the Jet-Etihad proposal is cleared by the FIPB, it will go to the Cabinet Committee on Economic Affairs (CCEA) for final clearance as the deal size exceeds Rs 1,200 crore.

Additionally, the Securities and Exchange Board of India and the Competition Commission of India have also sought for more clarity on the deal.

The deal, the first in an active Indian carrier since the government allowed 49% foreign direct investment in the sector in September last year, is expected to help Jet retire a part of its debt – currently at over Rs 12,000 crore and also help in raising capital.

The airline recently made changes at the CEO level as it announced the appointment of Gary Kenneth Toomey, who will head the operations at the Jet Airways post the resignation of Nikos Kardasiss.

It is not clear yet as to by when the deal will get the said clearances. The two airlines, however, are in the process of drawing up strategies for expanding its operations in domestic as well as international space.

In March this year, FIPB cleared the Rs 81 crore joint venture between Air Asia and Tata Sons and Telstra Tradeplace.