AirAsia-Tata JV won’t face hurdles: DIPP

The department of industrial policy and promotion (DIPP), the principal policy making body on FDI, has stated in no uncertain terms that its regulations for the aviation sector are crystal clear and needed no further clarification with particular reference to the AirAsia-Tata Group deal. The department, at a meeting to clear the deal, has said that the existing policy allows foreign carriers to set up new joint ventures with Indian partners and there is no ambiguity in the regulations.

The statement puts to rest any doubt regarding the hurdles that the proposed airline venture of Malaysian carrier AirAsia along with the Tata Group, might have faced on the FDI policy front. The venture, which was cleared by the Foreign Investment Promotion Board (FIPB) would now just require a no-objection certificate from the civil aviation ministry and a scheduled operator's permit from the directorate general of civil aviation.

The civil aviation ministry had raised concerns that Press Note 6 of 2012, which relates to FDI in airlines, was ambiguous and interpreted the policy to be applicable only for existing airlines and not for entities proposing a greenfield venture in the sector. In fact, aviation minister Ajit Singh have gone on record to say that while the ministry agreed to the the proposal in-principle, it may face procedural issues in wake of lack of clarity in the FDI policy.

"The applicant should first set up the company, obtain licence from ministry of civil aviation and then divest to a foreign collaborator in order to follow the policy item," the civil aviation ministry representative had stated at the FIPB meeting on March 6, when AirAsia's proposal was cleared. "The Cabinet note which elaborated the background for the policy amendment had clearly delineated that the amendment was aimed at infusing capital into the existing cash-starved aviation companies," the ministry argued at the meeting.

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