Jet-Etihad deal: FinMin raises questions on effective control

FIPB seeks more transparency on whether the rules concerning effective control would be followed once the deal fructifies

After the Securities and Exchange Board of India (Sebi), the Foreign Investment Promotion Board (FIPB) has sought more clarity on the Rs 2,058 crore Jet-Etihad deal about effective control and ownership of the premier Indian private carrier.

While 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 deal, official sources said.

The FDI holding, including the non-resident indian (NRI) investment by Jet chairman Naresh Goyal, would be 88.6 per cent. Once the deal involving the Abu Dhabi-based airline picking up 24 per cent stake in Jet at Rs 2,058 crore is finalised, the Indian carrier would have Goyal controlling 52 per cent, Etihad 24 per cent and Jet’s parent company Tailwinds and other foreign investments holding 14 per cent, sources said.

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

FIPB has also sought clarity from department of industrial policy and promotion (DIPP) on FDI policy in aviation and whether the 49 per cent FDI sectoral cap 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.

Civil Aviation Minister Ajit Singh accused the opponents of playing politics, and said ,“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 action, which might improve the economy, the aviation sector or anything as they think it will adversely affect them in elections.