New Delhi, July 29 (IANS): The Foreign Investment Promotion Board (FIPB) Monday gave its conditional approval for the proposed 24 percent stake-sale in Jet Airways to Abu Dhabi-based Etihad Airways.
"We have approved (Jet-Etihad deal) with some conditions," Economic Affairs Secretary Arvind Mayaram told reporters after the FIPB met here.
The development was also confirmed by Civil Aviation Minister Ajit Singh, who said that all the concerns raised by civil aviation ministry had been resolved.
"As far as I know, the (deal) has been cleared by the FIPB with minor changes to the language. The minor changes in the language is that English laws will be used for arbitration," Singh told reporters at his residence.
"All issues raised by civil aviation ministry has been resolved. Now the deal is expected to go to the Cabinet Committee on Economic Affairs (CCEA), but that will happen when a cabinet note is circulated by the finance ministry."
The conditional approval by FIPB came after the Jet Airways submitted an amended shareholding agreement to the finance and civil aviation ministries.
According to informed sources, the revised agreement was worked out after FIPB and stock market regulator Securities and Exchange Board of India (SEBI) and fair trade watchdog Competition Commission of India (CCI) raised concerns about the control and management of the company after the stake-sale.
"SEBI has already cleared the deal. Our (Civil Aviation Ministry) concerns have been resolved. Even the Corporate Affairs Ministry was looking into the deal. We have followed all proper procedures," Ajit Singh said.
"Jet would still have to take approval of civil aviation ministry even after cabinet nod for any future changes to shareholders agreement under the Aircraft Act 1934," the minister said.
The new agreement submitted by Jet Airways is said to have addressed the control and management issues, with Etihad agreeing to have only two board of directors from an earlier proposed four in the 10-member airline board.
Apart from the finance and civil aviation ministries, the FIPB, SEBI and the Department of Industrial Policy and Promotion (DIPP) had been studying the new agreement.
Earlier, on June 14, the FIPB had deferred a decision on approving the proposed stake-sale, till the time Jet clarified on the issues raised by it.
The deal is expected to garner around Rs.2,058 crore ($379 million) for Jet Airways, which will enable the company to service its debts and provide passengers better connectivity.
On April 24, nearly eight months after the Indian government permitted international airlines to invest in domestic passenger carriers, Jet Airways had announced a 24 percent stake sale to Etihad Airways.
The two airlines were negotiating a Jet Airways' stake sale since last September.
Shares of Jet Airways at the Bombay Stock Exchange (BSE) increased by 4.22 percent or 16.70 points and closed at Rs.412.20 from its previous close of Rs.395.50 Friday.
Jet Airway's scrip value had increased by 17.43 percent Friday at Rs.395.50.
Ajit Singh added that: "The deal is good for the passengers and the Civil Aviation sector. We require alot of foreign investment in our infrastructure side. The deal will also reaffirm investor confidence in the India (growth) story."