Paving the way for the biggest ever foreign investment in India's aviation sector, the Union Cabinet tonight cleared Jet Airways' proposed sale of 24 per cent equity to Abu Dhabi-based Etihad Airways, days after the Rs 2,058 crore deal got regulatory clearances.
"Yes, it has been cleared," said Civil Aviation Minister Ajit Singh after a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh.
Replying to questions, he said the Jet Airways, Etihad Airways deal has "gone through all the regulatory processes" and would be "good for civil aviation and good for the passengers".
The proposal was of Etihad Airways to subscribe 27,263,372 Jet Airways shares of Rs 10 each, amounting to 24 per cent of post-issue paid-up equity share capital for Rs 2,057.66 crore.
CCEA gave its nod on the conditions that, among other things, Jet Airways and Etihad Airways would adhere to RBI policy guidelines and SEBI regulations, comply with all Indian laws and take prior FIPB approvals for any further changes in the shareholders agreement, commercial cooperation agreement, articles of association, investment agreement and shareholding patterns, the sources said.
The Jet-Etihad deal has already been cleared by the Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB), with the minister saying that approval to the deal was delayed as it had to go through all regulatory processes, including twice to FIPB.
Asked about the ongoing vetting of the deal by the Competition Commission, Singh said, "It is a continuing thing. Any time competition related issues come up, they have to look into it."
Once the deal is clinched after CCEA approval, Jet promoter Naresh Goyal would hold 51 per cent stake and Etihad 24, with 25 per cent remaining with the public.
The Jet-Etihad deal is so far the single-largest FDI in Indian aviation sector with Malaysian carrier AirAsia announcing that it would initially invest USD 30 million (over Rs 185 crore) in AirAsia India, its joint venture with Tata Sons and Telstra Tradeplace.
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