The Tatas will have to wait for some more time before their Rs 1,475.6 crore airline project takes off. The Foreign Investment Promotion Board (FIPB), which was slated to discuss the proposal on August 8, is not likely to meet this week owing to Raksha Bandhan, a restricted holiday.
More delays are in the offing as the FIPB, which meets every Saturday, will not assemble on August 15, another holiday. "This means that the Tata proposal cannot be discussed by the FIPB till August 22 unless the board decides to meet on a weekday," government officials said.
In a related development, officials indicated that the industry ministry is yet to receive any feedback on the Tata proposal from the civil aviation ministry, the administrative ministry, which had asked for the deferment of the proposal. The case has already been deferred once by the FIPB after the BJP-led coalition government came to power. The industry was expecting a final decision on the Tata proposal by August 8.
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The Tatas first submitted the application for the domestic airlines in technical collaboration with Singapore Airlines in December 1997. This is the second time that the Tatas have put the forward its application to the FIPB. Earlier in February 15, 1995 it had approached FIPB to start an airline in India with an equity participation by Singapore Airline.
After a few modifications, the project received FIPB clearance in December 1996 only to be rejected by the civil aviation ministry. The civil aviation ministry has since changed and chopped its own aviation policy several times over to stall the airline project. The Tatas even dropped Singapore Airlines from the joint venture to conform to the new policy but the civil aviation ministry has continued to stall the project.
In June civil aviation minister K Ananthakumar had told Business Standard that his ministry cannot clear the project unless the FIPB gave a green signal to the Tata venture. Senior industry ministry officials, however, were nonplussed at the civil aviation ministry's stand on the Tata project saying that it was the civil aviation ministry which had been asking for deferment of a decision on the proposal.
However, in April when the FIPB had listed the Tata airlines project for discussion (the project had been cleared by former industry minister Murasoli Maran earlier this year for CCFI's consideration), the civil aviation ministry asked for a four-week deferment alleging that earlier the project had been cleared without its consent.
Industry ministry maintains that it cleared their new Tata airlines project, minus SIA, as it confirmed to the aviation policy and was forced to take this decision in the absence of civil aviation ministry representatives who "failed to turn up during meetings despite repeated requests."