Ahead of the crucial Foreign Investment Promotion Board (FIPB) meeting on Jet-Etihad deal on July 29, the Commerce and Industry Ministry is believed to be in favour of taking a liberal view on FDI cap in the civil aviation sector so that the Rs.2,058-crore transaction goes through.
With the FIPB in its last meeting deferring a decision on Jet Airways proposal to induct Etihad as a partner over the issue of control of the Indian carrier, the Department of Industries Policy and Promotion suggested two options — addressing the issue of ‘effective control’ through the FIPB and referring the matter of FDI limit to an inter-agency group.
Sources with direct knowledge of the development said Commerce and Industry Minister Anand Sharma had ruled out referring the proposed deal to any more groups.
In September last, the Cabinet had allowed foreign airlines to take up to 49 per cent stake in domestic carriers. It did not alter the existing rule of 100 per cent NRI investment. The rules, however, remained vague in cases where a foreign airline is picking up stake in a carrier where there is already NRI investment (technically treated as FDI).
In the case of the Jet-Etihad deal, the Ministry wanted the investment to be treated separately, sources said. It may be noted that Jet Airways promoter Naresh Goyal is a non-resident Indian.