No problem with the joint venture, says Ajit Singh

Malaysian carrier AirAsia's, along with its joint venture partners Tata Sons and Telestra Tradplace owned by Arun Bhatia, moved an inch closer towards launching their new airline with the Foreign Investment Promotion Board (FIPB) giving it’s approval to the proposal.

AirAsia had announced last month that it would set up a 49:30:21 JV with Tata Sons and Mr. Bhatia to launch the new airline.

After news of FIPB approval came in, Civil Aviation Minister Ajit Singh told reporters that he did not see a problem in the AirAsia JV. “The Commerce and Industry Ministry should change the rules to bring about clarity. Our Ministry will see that the JV adheres to the laid-down rules,” he said.

However, Mr. Singh said, there were some procedural problems as the DIPP notification on foreign investment in aviation states that it should be investment by a foreign airline in an Indian carrier.

“ We will seek a clarification from the Ministry on this issue as to what is the exact definition of the FDI policy in aviation, particularly whether a foreign airline could invest in a new venture,” he remarked.

The FIPB clearance has been granted in lieu of the policy allowing 49 per cent FDI in the aviation sector by a foreign carrier. Clarity will be sought on the issue of whether investment could be allowed in the existing carrier or in a new one also, an official said.

The AirAsia JV will now need to approach the aviation regulator, Directorate General of Civil Aviation (DGCA), for further clearances and a scheduled air operator's permit, which would allow the airline to undertake flying operations. The issues likely to be covered under the Aviation Ministry and DGCA include issuance of a no-objection certificate (NOC) and Scheduled Operator's Permit (SOP). The requirements under this would include whether two-thirds of the directors of the company's Board are Indians and whether the directors have security clearance from the Home Ministry.

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