AirAsia nod only after close scrutiny

Even as concerns remained over whether AirAsia’s India plans has run into rough weather, Union Minister of Commerce, Industry and Textiles Anand Sharma clarified that the Foreign Investment Promotion Board (FIPB) had given its approval after “careful scrutiny”.

“You have to clearly read the press note. It is FDI in civil aviation in an existing airline or in the capital of a company. See, you have to look at the fine print. I am sure this decision has been made after very careful scrutiny of the policy and its understanding by the FIPB,” Sharma said on the sidelines of the ICC Asia Pacific CEO Forum on Thursday.

The FIPB granted an “in-principle” approval to the Malaysian budget carrier’s plans to start a new airline in India in partnership with Tata Sons and Arun Bhatia’s Telestra Tradeplace Pvt Ltd on Wednesday. This would be the first foreign investment proposal to be cleared by the finance ministry after the easing of Foreign Direct Investment (FDI) policy in aviation.

The Department of Industrial Policy and Promotion (DIPP) has been approached by the aviation ministry for a clarification over whether the amended FDI norms in aviation are applicable to new airline companies or only to existing ones. FIPB officials said that the three companies would now have to approach DGCA for the relevant licences and a scheduled air operator’s permit.

AirAsia had announced its plans to enter Indian skies last month and said that it intends to control 49 per cent in the new airline with Tata group company, Tata Sons and Telestra Tradeplace occupying 30 per cent and 21 per cent respectively. The initial investment in the JV would be around `80 crore. A finance ministry official said that the clearance had been given on the grounds that 49% FDI is now allowed by a foreign airline.