FIPB approves AirAsia-Tata airline plan

Malaysian budget carrier AirAsia's bid to launch an airline in India by joining hands with Tata Sons was today cleared by the Finance Ministry, the first such investment by a foreign operator.
Soon after the Foreign Investment Promotion Board (FIPB) gave its nod to the proposal at a meeting here, the Civil Aviation Ministry sought further clarity on the FDI policy in aviation, particularly on whether a foreign airline could invest in a new venture.
A senior government official said the initial investment by the AirAsia-led joint venture would be Rs 80 crore.
AirAsia has announced it would set up a 49:30:21 joint venture with the Tata Sons and Telestra Tradeplace of Indian investor Arun Bhatia to launch a new Indian airline.

The official said the FIPB clearance was granted in accordance with the policy which allows up to 49 per cent FDI by a foreign carrier in an Indian airline company.
Soon thereafter, the Civil Aviation Ministry sought clarity on the FDI policy in the aviation sector on the grounds that it spoke of allowing such investment in an existing Indian carrier and not a new one.

"The Commerce Ministry should change the rules to bring about clarity. Overall, I don't see a problem in the AirAsia joint venture. Our Ministry will see of the joint venture adheres to the laid-down rules," Civil Aviation Minister Ajit Singh told reporters here.

"There are some procedural problems.... The notification says (investment by a foreign airline in) an Indian carrier. So they (investor) have to follow the procedure because the Cabinet took a decision, following which the Commerce Ministry issued the notification," he said.
With the FIPB clearance, the AirAsia joint venture would now have to approach aviation regulator Directorate General of Civil Aviation (DGCA) for further clearances and a scheduled air operator's permit which allows an airline to undertake flying operations.