The PMO also asserts there are no differences within the government over the air services agreement between India and Abu Dhabi.

As the Rs. 2,058 crore deal between India’s leading private carrier Jet Airways and Etihad of Abu Dhabi kicked off controversy and evoked sharp political reactions, the government on Tuesday said the equity stake matter was still under examination and there was "no question of backtracking or disowning it as it is not an agreement with the government."

In a statement, the Prime Minister’s Office (PMO) said media reports over the last few days on the India-UAE (Abu Dhabi) bilateral air services agreement and on the Jet-Etihad equity stake proposal were "factually incorrect and baseless."

"There is absolutely no disagreement within the government or between the Ministers and Prime Minister on the matter. The Prime Minister is neither washing his hands off the bilateral air services agreement nor is the PMO trying to do a U-turn on the issue now," the PMO statement said.

It rebutted reports about objections to the deal raised by senior CPI leader Gurudas Dasgupta, BJP leader Jaswant Singh, Dinesh Trivedi (Trinamool Congress) and Janata Party chief Subramanian Swamy, each of whom had sent separate letters to the Prime Minister Manmohan Singh.

On the stake sale issue, the PMO said this was a "distinctly different" matter as it was an agreement between two private parties.

"This is a matter between private parties which needs to be approved by the concerned agencies as per the policies and laws in place. This is not an agreement between governments and there is no question either backtracking from or disowning this proposal as this is not an agreement with the government."

The statement added that the issues raised have been referred to the Civil Aviation Ministry, Department of Industrial Policy & Promotion, Department of Economic Affairs and the Corporate Affairs Ministry "for examination and appropriate action as they were concerned with various aspects of the complaints."

The issues relating to security concerns were also referred to the Cabinet Secretary for examination to suggest whether there was a need to look into any issues afresh.

In April, Etihad had announced its decision to purchase 24 per cent stake in Jet Airways for Rs 2,058 crore. On June 13, the Foreign Investment Promotion Board (FIPB) deferred a decision on the deal, saying it required more clarity on control and ownership structure of Jet Airways. Jet Airways chairman Naresh Goyal owns a 51 per cent stake in the airline.

Ajit Singh defends deal

Defending the deal, Civil Aviation Minister Ajit Singh said those opposing it were "long on politics and short on facts ... It is such an important deal..., the first big deal in Civil Aviation Ministry. In terms of FDI, it is bigger than any other deal this year."

Seeking to set the matter at rest, External Affairs Minister Salman Khurshid said the deal was being examined as normally as any other deal. "The FIPB has to approve any such deal and sometimes they ask for clarifications. I don't think any deal has halted."

In its statement, the PMO gave the sequence of events and pointed out that the Prime Minister had also directed that the matter be brought to the Union Cabinet "much before any of the letters complaining about the seat entitlement enhancement or the Jet -Etihad equity stake were even received."

Something fishy: opposition

CPI leader Gurudas Dasgupta shot off a second letter on the issue to the Prime Minister on Tuesday, saying granting of rights to UAE to operate flights to cater to 37,000 seats "are in fact the price paid by India, for benefitting Jet Airways, as without these licences Etihad was not interested in buying portion of Jet Airways."

Demanding cancellation of the Jet-Etihad deal, Mr. Dasgupta told The Hindu that the matter might have been between two private parties but it was the government which had given its approval. "If the Civil Aviation Ministry is in the wrong, so is the Prime Minister. Even though I had similarly forewarned him, the Prime Minister did the same thing in 2G spectrum and in gas pricing," he alleged.

Mr. Dasgupta said in the even of the Jet-Etihad deal going through all airlines of India will lose the market to Etihad and make even more losses. He apprehended that India would not have any airline industry worth the name.

In his earlier letter of May 1, the CPI leader had claimed that the "cash rich Gulf airline may prevail upon Jet Airways to increase the flight undercutting the tariff and taking over large number of passengers who otherwise would have taken Air India."

BJP leader and former Civil Aviation Minister Shahnawaz Hussain said "there is something fishy in this deal. The PMO should clarify its stand on the issue."