FIPB approves Tata-Singapore Airlines venture

Government today gave green signal to Singapore Airlines' proposal to start an aviation venture with Tata Sons entailing an initial foreign investment of USD 49 million. "It (Tata-SIA proposal) has been cleared," Economic Affairs Secretary Arvind Mayaram told reporters after a meeting of the Foreign Investment Promotion Board (FIPB) here.

Mayaram said no riders have been set for the joint venture. Also Read: 'Tata-SIA Airline will be good for consumers, industry'
In their new venture, Tata SIA Airlines Ltd, Tata Sons would hold 51 percent stake and Singapore Airlines (SIA) 49 percent. The venture secured the approval of the Corporate Affairs Ministry last week. With the clearance of the FIPB, decks are cleared for Tata SIA to launch operations as a full-service air carrier in India.
The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, is an inter-ministerial panel for approving Foreign Direct Investment (FDI) across sectors.
The two partners are making an initial investment of USD 100 million to launch the airline, which may take off next year after getting all the required clearances.
Tatas and Singapore Airlines have assured the government that control of their proposed venture would always remain in Indian hands, while seeking approval to offer full-service passenger airways on both domestic and international routes.
The JV will be piloted by a six member board. The Singapore-based carrier would provide technical expertise and know-how to the new airline apart from giving access to its global network and vendors.
Soon after the nod, Ratan Tata told CNBC-TV18 the company would shortly seek a no-objection certificate from the civil aviation ministry.
Kapil Kaul, CEO - South Asia, CAPA, says: "We expected the approval to come in the first meeting itself. I am glad that happened. It's an important milestone for the airlines. First step now would be to get NoC from the government that should take 2-3 months, post NoC they would have to go to DGCA for scheduled operator licence where they will have to go through a series of preparedness. My expectation is by end of January or early February we could see them getting a NOC which would then set up 6-8 months time for airlines to start."
Aviation ministry sources ruled out any hurdles for the JV especially since the proposal has clearly spelt out that the joystick would be in the hands of the Tatas.
In February this year, Tatas also announced a partnership with Malaysia's AirAsia for a low-cost carrier in India, wherein Arun Bhatia's Telestra Tradeplace is the third partner. FIPB had approved this venture in April 2013. Even this wouldn't be a problem, although BJP leader Subramanian Swamy has moved the Delhi High Court with a public interest challenge to both ventures. The court has issued notice to the respondents and is scheduled to hear the matter on the 30th of this month.
This is the third attempt by Tatas and SIA to enter the Indian civil aviation sector. Tatas have a long history of association with civil aviation in India. JRD Tata had started Tata Airlines in 1932, which was later in 1946 renamed as Air India and was subsequently nationalised in 1953.
The JV would also provide air transport carriers for both passengers and freights as well as supporting services to air transport, like operation or airport flying facilities, radio beacons, flying control centres and radar stations.
As per latest data, during the April-July period, FDI inflow grew by 20 percent to USD 7.05 billion, from USD 5.90 billion in the same period last fiscal. (With inputs from PTI)