Mar 08, 2013 10:13 AM IST | Source: CNBC-TV18

Favour AirAsia JV; no due diligence shortcuts: Ajit Singh

Union aviation minister Ajit Singh says, on CNBC-TV18, that the government favours the AirAsia-Tata JV and adds that there will be no shortcuts in the due diligence process required before issuing the licence for operations.

Union aviation minister Ajit Singh says that according to the FDI note, foreign carriers can buy stake in existing companies and foresees no problems for companies starting greenfield operations.

"There are no apprehensions regarding the FDI policy and the government is in favour of AirAsia-Tata alliance. But the AirAsia-Tata JV will have to apply to the ministry following which the DGCA will vet the proposal," he explains to CNBC-TV18.

The minister was hopeful of the  Jet-Etihad deal and clarifies that the concerns raised by Etihad are not related to aviation.

The DGCA has not received any credible plan from Kingfisher Airlines and has not received any communication from Vijay Mallya.

Below is the edited transcript of the interview on CNBC-TV18

Q: There seems to be an apparent disconnect between the aviation ministry’s position and the view of the Foreign Investment Promotion Board (FIPB), the finance ministry and the department of industrial policy and promotion (DIPP) or the commerce ministry . Is your ministry clear about Press Note 6 which the FIPB, the DIPP and the finance ministry seem to believe that it clearly allows foreign direct investment (FDI) into greenfield airline operations? What kind of clarifications have you sought from the DIPP?

A: There is no disconnect, apprehension or any such problems. The policy is really clear. FDIs can participate up to 49 percent in any airline in India. But the note issued by the DIPP says that the FDI can only be in an existing airline. But that is not a problem. It does not make any difference whether the joint venture (JV) is formed earlier or after seeking a licence from the civil aviation ministry. The ministry will still go through the process.

Q: Sources within the DIPP say that there is absolutely no need for any further clarification because Press Note 6 allows FDI into greenfield operations?

A: We are in favour of FDI and the AirAsia-Tata application is within the policy framework. But they have to meet the regulatory requirements.

Q: Is the aviation ministry opposed to allowing FDI into greenfield operations?

A: The policy clearly says that other airlines are now allowed to invest up to 49 percent in the FDI of an airline. That is the policy. But the notification made by DIPP mentions Indian carriers. That is what we have pointed out. Otherwise the civil aviation ministry agrees with the FIPB.

Q: How quickly will the Directorate General of Civil Aviation (DGCA) move to issue a clearance that will allow AirAsia to kickstart operations?

A: First, they have to apply to the ministry for a no-objection-certificate. But before that a company will have to be formed, directors will have to be appointed and other requirements such as the availability of capital will have to be verified by the civil aviation ministry. Only then will the other ministries be able to begin their verification processes.

Q: The government has made it very clear that FDI is an economic priority. What is the broad timeline for the licence approval process?

A: The home ministry has to check the antecedents of the directors and foreign employees. It all depends on how quickly the information is provided.

Q: Has Etihad has sought an assurance from the government of India to guarantee the safety of its investment in Jet? What is the status of the deal?

A: I am very hopeful that the deal will go through. The concerns they have been raised do not relate to the aviation sector. Discussions are on between Jet and Etihad and they relations are cordial, I hope the deal will be concluded in the next four to six weeks.

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