Financial Daily from THE HINDU group of publications
Tuesday, Jun 29, 2004
Foreign Direct Investment
Logistics - Airlines
Government - Policy
Delhi, Mumbai airport FDI at 49 pc cleared
New Delhi , June 28
THE Government on Monday approved a proposal capping the foreign direct investment (FDI) limit for restructuring and modernisation of the Delhi and Mumbai airports at 49 per cent.
The four-member empowered Group of Ministers (e-GoM), which met today, gave its seal of approval to a proposal mooted by the Ministry of Civil Aviation to fix 49 per cent as the maximum permissible limit of FDI in the proposed joint venture company.
The previous National Democratic Alliance (NDA) Government had pegged the FDI level at 76 per cent for the restructuring and modernisation of the two metro airports.
The e-GoM meeting has decided that the Airports Authority of India (AAI) and other Government public sector undertakings (PSUs) would hold 26 per cent equity, while the remaining 25 per cent equity will be held by Indian companies.
Sources indicated that for the purpose of the project, Indian companies will be defined as companies incorporated in India and 100 per cent owned by Indian or Indian entities (Indian companies).
They added that despite the e-GoM firming its decision only today, the last date for submission of expression of interest (EoI) for the two airports would not be extended beyond July 20.
Besides, the empowered group decided that Indian scheduled airlines and their group entities will be allowed to have a maximum equity of 10 per cent in the joint venture.
Indian financial institutions would be allowed to participate in the consortium of the successful bidder at a later stage.
The successful bidder will be required to submit a human resource (HR) plan for absorption of a maximum number of the existing employees in the joint venture company (JVC).
The efficacy of the HR plan for absorption of maximum number of employees will be given suitable weightage in the evaluation at the request for proposal stage.
The e-GoM also raised to three years the period for mandatory deputation of AAI employees, which the JVC will have to ensure.
At the end of the deputation period, the JVC will be required to absorb 40 per cent of the existing employees working at these airports.
Such employees may belong to all categories except those engaged in communication, navigation, surveillance, air traffic management and security. Moreover, employees retiring during the three-year period and those absorbed by AAI in any other manner will also not be considered.
The e-GoM also approved the appointment of Air Plan, an Australian company, as the Global Technical Advisor for the project and Amarchand Mangaldas and Suresh A. Shroff & Company as legal consultants for the restructuring process.
Official sources said that although domestic scheduled airlines have been allowed to pick up a 10 per cent stake, a single airline alone would not be allowed to take a stake in both the metro airport projects.
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