FIPB defers decision on Jet-Etihad deal

The Foreign Investment Promotion Board (FIPB) on Friday deferred a decision on Rs 2,000-crore (Rs 20 billion) Jet-Etihad deal, the largest foreign investment in the Indian aviation sector, and sought clarity on control and ownership.

The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, however, cleared the FDI proposal of Norway's Telenor to hike stake in its domestic subsidiary to 74 per cent.

"It (Jet Airways-Etihad proposal) has been deferred. We need more details of effective control and ownership," Mayaram told reporters after a meeting of the FIPB. As per the proposal, Jet Airways plans to sell 24 per cent stake to Abu Dhabi-based Etihad for about Rs 2,058 crore (Rs 20.58 billion).

Besides, Telenor is seeking government approval to hike stake by 25 per cent in its domestic subsidiary Telewings to 74 per cent.

"Telenor proposal has been approved," Mayaram said. It could not be immediately ascertained the amount of FDI expected to come through the Telenor transaction. In March, FIPB had deferred decision on the proposal.

Jet-Etihad deal assumes immense significance against the backdrop of the government looking to attract more foreign investment into the country.

Market regulator Sebi and competition watchdog CCI have already sought clarity from the domestic carrier on the transaction, to ensure that Etihad's ownership powers in Jet remains in line with its 24 per cent stake in the company's equity capital.

Shares of Jet Airways closed at Rs 469.20, up 8.47 per cent on the BSE. This is the largest foreign investment proposal in the aviation sector after the government allowed foreign carriers to pick up stake in domestic airlines in September last year.

In March, the FIPB had cleared the Rs 81 crore (Rs 810 million) investment proposal of AirAsia to set up a JV airline company with Tata Sons and another partner.