The Foreign Investment Promotion Board (FIPB) on Friday deferred a decision on Abu Dhabi-based Etihad Airways planned 24% stake buy in Naresh Goyal-led Jet Airways. The board has sought more details on “effective control” and “ownership”.
"It (Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership," said Arvind Mayaram, secretary, economic affairs, who heads the FIPB, the nodal agency that clears foreign direct investments in India.
Discrepancies were noticed in the deal signed by the two and the application submitted to the FIPB on the number of foreign nationals on the board which, as per rules, cannot exceed more than one-fourth of the total board strength, sources said.
Concerns were also raised on the place of business being moved from India to Abu Dhabi. It was also pointed out that the substantial ownership and effective control indicated that Etihad was wielding far more control over Jet than the agreement indicated.
The Jet Airways spokesperson did not respond to calls from HT.
The Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI) have already sought clarifications from Jet on the Rs 2058-crore deal, to ensure that Etihad’s ownership powers in Jet remains in line with its 24% in the company’s equity capital.
Aviation minister Ajit Singh said SEBI has raised some concerns and asked both the airlines to "rectify some parts of the pact." "I don’t see any major problem for the deal," he said.