Tata Airline Plan Likely To Get Fipb Nod Today

The Tata airline project is expected to get a go-ahead at the Foreign Investment Promotion board (FIPB) meeting to be held here today.

Speaking to Business Standard, Union civil aviation minister Ananth Kumar said if the proposal met the guidelines, it will be cleared.

When asked why the project had not been cleared so far when ostensibly it met the norms, the minister said, "Earlier, the guidelines did not permit it." He refused to elaborate.

Aviation ministry sources, however, said the proposal was not cleared because it did not fully meet the revised guidelines.

On June 11, two days before the Tata proposal came up before FIPB the last time, the civil aviation ministry had announced revised guidelines restricting technical tie-ups between domestic aviation companies and foreign airlines in certain specified areas and defined indirect equity to ensure that no control was exercised by a foreign airline over a domestic airline company.

An assurance from the private operator was also made mandatory that it was meeting and complying with these guidelines.

The FIPB hence deferred the Tata proposal for four weeks, following which the ministry wrote to the Tata's and received an assurance that it would comply with all the new guidelines.

Sources also said the letter to the industry minister from several MPs opposing the project was another factor that led to the deferment of the project's clearance.

It is, however, now likely that the project will be cleared, sources said, since it also met the new guidelines.

The project once cleared by FIPB will go to the cabinet committee on foreign investment (CCFI) and require a nod from the aircraft acquisition committee of the aviation ministry.

The new guidelines restrict technical assistance from a foreign airline in specified areas like pilot training, maintenance and software.

Sources were of the view that technical assistance of the kind that is not available in India will be permitted, subject to the condition that no indirect control - through equity or management control - from a foreign airline is exercised on the domestic company.

Hectic lobbying by Indian Airlines, Jet Airways and certain politicians that are backing these airlines is being blamed for the delay in clearing the project, which has been consistently blocked by successive governments, including the Congress, the United Front and now the Bharatiya Janata Party.