FIPB meeting on Tata-SIA postponed to October 24

Companies were to meet FIPB to consider proposal to start full-service airline

The ministry of finance said on Thursday that the meeting scheduled by the Foreign Investment Promotion Board (FIPB) to consider, among other proposals, one from Tata Sons and Singapore Airlines (SIA) for a full-service airline had been postponed to October 24, from this Friday.

 

“Due to some unavoidable circumstances the 197th Meeting of the Foreign Investment Promotion Board (FIPB) scheduled to be held on Friday, the October 18…has been postponed and will now be held on Thursday, the October 24”, the Ministry of Finance said in a statement.

 

Besides the SIA-Tata proposal, the FIPB (chaired by Economic Affairs Secretary Arvind Mayaram) was to take up 29 other foreign investment applications. All these will now be considered on October 24.

 

The proposed Tata SIA Airlines is to have an initial investment of $100 million, said the entities’ announcement on September 19. The Tatas will have 51 per cent stake and SIA the rest..

 

Effective control will be with Tatas, according to the proposal. SIA would have a minority representation on the board and “not be in a position to have de facto control”.

The board of the proposed airline is to eventually have six directors, the two have said in their application; four to be nominated by Tata Sons. The chairman will be a Tata nominee, and this and at least two-thirds of the director posts will go to Indians, conforming to the government’s policy on foreign direct investment.

According to the MoU inked between Tata Sons and Singapore Airlines on Sep 19, the board of the proposed joint-venture company is initially scheduled to comprise three directors. While two directors – Prasad Menon and Mukund Rajan – will be nominated by Tata Sons, Mak Swee Wah is the initial director nominated by SIA. The board will be chaired by Menon. Subsequently, the board would be expanded to include six directors.

The JV company will be incorporated in New Delhi and its principal place of business shall be India at all times. The airline has made Delhi its operational hub because of the huge capacity constraints in the Mumbai airport and better infrastructure facilities at the Delhi airport.

 

Besides the FIPB, the venture will require approvals the Directorate General of Civil Aviation, the tax department and other ministries.

Tata-SIA has said it would like to operate international flights from India depending upon government approvals. At present, Indian government rules do not allow domestic airlines less than five years in operations and with a fleet of less than 20 aircraft to commence international operations. The ministry of civil aviation has been reconsidering the policy but no decision has been taken yet.

 

The Tatas already have a partnership with Malaysian carrier AirAsia for a low-cost airline that's likely to start operating in India later this fiscal.