Ministry Defers Decision On Jet, Tata Proposals

The civil aviation ministry has decided to postpone the two main proposals before it _ the Tata airline proposal and Jet Airways' request for accquiring 5 ATR planes for regional operations.

The ministry will not take up these proposals at its aircraft accquisition committee meeting to be held here today.

The Tata airline proposal will be taken up after the formal Foreign Inves-tment Promotion Board (FIPB) clearance comes through, said civil aviation ministry. Ministry sources said that the Jet airline proposal will also be taken up at the next meeting after the ministry gets more details on Jet's plans.

The committee recommends granting no objection certificates and clears import of aircraft for domestic operators.

This is the second time the controversial Tata airline proposal has been deferred by aircraft accquisition committee.

It had deferred a decision at its last meeting held on April 24 while no objection certificates (NoCs) were granted to East West airlines and Modiluft at that meeting.

On April 24, the proposal was postponed since it was argued that Cabinet Committee on Foreign Investment (CCFI) approval must come first. At that time, the proposal had FIPB clearance.

It was however then argued that the FIPB is not the competent authority since the foreign equity investment amount involved is over Rs 200 crore and that CCFI clearance must come before a no objection certificate is recommended.

Aviation industry sources had then pointed out that the committee could have cleared the proposal subject to CCFI clearance since the project has otherwise been found to be technically sound and in line with policy.

It was argued that there was no need to hold back the NoC since the CCFI needs to clear the proposal simply because of the foreign equity amount involved.

Sources pointed out that the project had in fact moved a step backwards since now after FIPB clears it, the project will require CCFI clearance also before the NoC is granted.

Sources added that the clearance of the project was entirely a political decision and had nothing to do with the merits of the venture.

FIPB is now expected to take up the project on August 17.