The Foreign Investment Promotion Board (FIPB) has given its nod to Singapore Airlines (SIA) to set up a full service airline in India in partnership with the Tata Group that would entail an initial foreign investment of $49 million.
Entrusted with vetting proposals from foreign companies for bringing in foreign direct investment (FDI) in the country from across sectors, the inter-ministerial FIPB, comprising senior government bureaucrats and headed by the Economic Affairs Secretary Arvind Mayaram, cleared the proposal of Tata-SIA Airlines Limited at its meeting here on Thursday.
Tata Sons will be the majority partner in the venture with 51 per cent stake, while Singapore Airlines will hold 49 per cent. Tata Sons is the holding company of the Tata group that has branched out to salt and software. “It (Tata-SIA proposal) has been cleared,’’ Mr. Mayaram told journalists after the meeting of the FIPB. No riders had been set for the joint venture, he added.
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The two companies plan to set up the airline with an initial investment of $100 million, where the Tatas will pump in $51 million, while SIA will invest $49 million. The venture got the green signal from the Corporate Affairs Ministry last week, and the Commerce Ministry also approved the shareholding agreement.
This is a third attempt by the Tatas and SIA to enter the Indian civil aviation sector. The Tatas have had a long association with civil aviation in the country when JRD Tata started Tata Airlines in 1932, which was later renamed as Air India and was subsequently nationalised in 1953.
In Tata-SIA joint venture, the two partners are making an initial investment of $100 million to launch the airline which is likely to take wings next year after getting all the required clearances. Tatas and Singapore Airlines sought the government approval to offer full-service passenger airways on both domestic and international routes. The JV would also provide air transport carriers for passenger and freight as well as supporting services to air transport, like operation or airport flying facilities, radio beacons, flying control centres and radar stations.
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In February this year, the Tatas also forged a partnership with Malaysia’s AirAsia for a low-cost carrier in India in which Arun Bhatia’s Telestra Tradeplace is the third partner.