The controversies could so easily have been avoided. When Jet Airways and Abu Dhabi’s national carrier Etihad Airways announced a Rs. 2,058-crore deal on April 25, it was hailed as a sign of India’s continued attractiveness as an investment destination.
Around the same time, the ministry of civil aviation reached an agreement with the UAE to enhance the number of weekly seats between Abu Dhabi and India by a factor of four.
The two issues have got mixed up amid allegations of wrongdoing and possible breach of security.
How? The deal with Jet Airways entitles Etihad, under the terms of a shareholder’s agreement, to nominate the former’s CEO and three directors on the board with a minority 24% stake.
This, according to the Foreign Investment Promotion Board (FIPB), raises serious questions over control and ownership of the Indian carrier following the transaction.
In other words, it felt the Abu Dhabi carrier was getting a disproportionate say in the affairs of Jet despite holding a relatively small stake.
This is a matter between a private company and its shareholder and can easily be resolved by amending the shareholder’s agreement.
The other allegation — that the increased flying rights between Abu Dhabi and India were designed to help Jet Airways and Etihad — is more serious as it concerns government policy and the application of discretionary powers by public servants.
This issue will be resolved by the appropriate authorities and the Cabinet after considering all sides of the argument.
Our angst is about something more basic: why didn’t the government, or, more particularly, the civil aviation ministry think this issue through before reaching an international agreement with another sovereign nation?
The PMO has denied that there is any disagreement within the government over the India-UAE deal.
This could have been easily avoided if only there had been wider consultations and better dissemination of information before and after reaching the agreement.
To cut a long story short, this isn’t quite what the doctor ordered, especially in these desperate times when we need every extra dollar of foreign investment/inflow that we can get.
But there is hope.
The Cabinet Committee on Investments will take a final call on the Jet-Etihad deal and the Cabinet on the bilateral agreement.
We hope that the prime minister and his wise men will take all the above issues into consideration while arriving at a decision.
More importantly, we hope the government will learn its lessons from this incident and consult all stakeholders before rushing into policy decisions or international agreements.