New Delhi: The Foreign Investment Promotion Board (FIPB) Thursday gave its green signal to Singapore Airlines to start a full-service airline in partnership with Tata Sons entailing an initial foreign investment of USD 49 million.
This is Tatas' second venture in the aviation sector after its tie-up with Malaysian carrier Air Asia in February for a low cost passenger air service.
"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.
While Singapore Airlines plans to invest USD 49 million, Tatas would be contributing remaining amount of the total planned USD 100 million investment in the joint venture.
The joint venture needs other government approvals before it can start operations.
Commenting on the development, Ratan Tata, Chairman Emeritus of Tata Group, welcomed the decision and told a TV channel that he was excited about FIPB approval. A lot of work was needed to be done to start the venture, he added.
Tata along with SIA CEO Goh Choon Phong met Finance Minister P Chidambaram after the FIPB cleared the venture.
To be called Tata SIA Airlines Ltd, the venture would be headquartered in Delhi.
The two had 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. Of the six directors, four would be nominated by the Tatas.
The FIPB also gave its approval to a foreign direct investment proposal by SingTel. The Singapore-based telecom company can now acquire stakes of its minoirty Indian partners, which include Bharti Enterprises, in its Indian arm.
Nicholas Ionides, Vice President, Public Affairs of Singapore Airlines, said: "We have yet to be informed by FIPB. However, we are very pleased with the reports of approval."
Aviation industry analysts welcomed the FIPB's nod to Tata-SIA joint venture.
"This sends our very positive signals to the global investor community," global consultancy KPMG partner and head for aerospace and defence Amber Dubey said.
The government now must do away with the rules that bar domestic carriers from flying international unless they complete five years of operations and have 20-aircraft fleet, he added.
PwC India executive director Dhiraj Mathur while welcoming the Tata Group's re-entry in the domestic aviation space said the joint venture will give a fillip to the sector.
Meanwhile, the FIPB also approved JM Financial issuing warrants worth over Rs 22 crore to well known banker Vikram Pandit, who has been roped in by the group for its proposed banking venture.
Sources said JM Financial's proposal was to issue warrants worth Rs 22.19 crore to Vikram Pandit on a preferential basis.
The allotment of these securities to Pandit, who earlier headed global financial major Citigroup, is part of Nimesh Kampani-led JM Financial's proposed banking venture plan.
Private sector lender Federal Bank today got FIPB approval for hiking foreign shareholding limit in the bank to 74 percent.
Since the proposal involved foreign investments of about Rs 1,400 crore, it would also require clearance of the Cabinet Committee of Economic Affairs (CCEA), a Finance Ministry official said after bank's application was approved in the meeting of FIPB.
The Mayaram-headed investment board also cleared pharma sector investment proposals, including that of Castleton Investment and Intas Pharmaceuticals.
However, decision on the proposal of Karnataka-based Provimi Animal Nutrition India was deferred.
First Published: Thursday, October 24, 2013, 12:37