The ministry of law has found that Delhi International Airport Ltd (DIAL) is well within the scope of the operation, management & development agreement (OMDA) in forming subsidiaries to upgrade the airport in Delhi.
Dial has been planning to develop its non-aero business to generate revenue from commercial use of land owned by Delhi airport through a 100% subsidiary, Delhi Aerotropolis. It is also planning another subsidiary for cargo operations.
The revenue from the property developed by Delhi Aerotropolis would go directly to Dial, which was allegedly planning to form a subsidiary to manage commercial development of the land and therefore share less revenue with Airports Authority of India (AAI).
The law ministry is of the view that as long as the money is going to the parent company and is distributed as per the revenue sharing agreement with the government and AAI, it is well within the legal purview.
In a bid to end the row over the many objections raised by the civil aviation ministry and the AAI over the formation of subsidiaries, Dial has offered berths for government representatives on the boards of subsidiary companies. Delhi Aerotropolis will be a wholly owned subsidiary but the cargo operation may have a strategic partner, sources said.
Meanwhile, the civil aviation ministry has sought the opinion of the solicitor general of India on the plan to tap commercial development of airport land through a subsidiary.