The Securities and Exchange Board of India shot down a request from the government to grant a special exemption from the provisions of the takeover laws for investment by foreign airlines in the Indian airline sector. Had this exemption been granted the government would have limited the foreign airlines investment to 26 per cent.
Union civil aviation minister Ajit Singh told a TV channel that Initially, the centre wanted to allow only 26 per cent. "We asked Sebi if an exemption could be given for the open offer requirements under the takeover rules. But they refused. So, we decided to allow 49 per cent."
The Union government was initially in favour of allowing only 26 per cent. However, since a 26 percent purchase in listed airline firms would trigger an open offer to acquire a further 26 per cent from the minority shareholders, the government decided against the move.
A key group of ministers yesterday reached a consensus on allowing foreign airlines to buy up to 49 per cent stake in Indian carriers. The move will take effect after a cabinet nod.
