The Finance Ministry will take up Malaysian airline AirAsia’s proposal to operate in India jointly with the Tata Group and Telestra Tradeplace early next month.
The Foreign Investment Promotion Board, scheduled to meet on March 6, will consider 18 proposals which also includes one by European airline Farnair Switzerland which entered the cargo segment in India last year.
AirAsia has sought FIPB approval for taking 49 per cent stake – the maximum allowed in the existing FDI policy – in a joint venture with Tata Sons Ltd, the pioneer of airline services in India, and Arun Bhatia’s Telestra Tradeplace Pvt Ltd.
Tata Sons is likely to hold 30 per cent stake in the company while the remaining 21 per cent share will be Telestra’s. The venture will mark Tata Group’s return to the aviation sector almost 60 years after it exited the business following nationalisation of Air India in 1953.
AirAsia will initially invest about $30-55 million in the proposed venture and would start operations with three to four Airbus A-320 aircraft, AirAsia CEO Tony Fernandes had said on Thursday.
The proposed joint venture will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week. It will give both Delhi and Mumbai a miss in the initial phase.
In India, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.
The FIPB will also consider a proposal from European airline Farnair Switzerland which bought a substantial stake in Quikjet Cargo Airlines Pvt. Ltd last February. Tata Capital Ltd is one of the key investors in Quikjet Cargo.
The airlines operates both cargo and passenger airlines in Europe but did not have the option to apply for the passenger segment last year as the FDI rules at that time did not permit it.
Other cases to be considered by the Board include proposals by Highdell Investment Ltd from Mauritius, Yes Bank, ICICI Venture Funds, SIDBI Social Venture Trust and Barefoot Resorts and Leisure.
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