The Cabinet Committee on Economic Affairs (CCEA) has cleared the controversial 2057 corore foreign direct investment by Abu-Dhabi based Etihad in domestic airline Jet Airways. The CCEA has approved the investment after the decisive Sebi clearance couple of days back.
Etihad’s 24 percent investment was earlier objected by SEBI as the regulator found the agreement provided more than proportionate right for the foreign investor in Jet Airways. As per the SEBI’s sanction, Etihad now will not have promoter’s right with 24 per cent stake. This means Jet will continue as the promoter and control will be with it. The earlier agreement was structured on the line that with minority share holding, Etihad enjoyed majority rights.
On its part, Etihad also reduced its number of directors on the board of Jet to two from the previously suggested three. Jet will have four members in the board.
Another objection raised by many MPs was that the government incurred heavy costs inrealizing the deal. In April, the government has offered additional 36300 seats between India and Abu Dhabi. It is expected that majority of the additional seats will go to the kitty of Etihad; weakening the position of national carrier Air India.
Necessity to promote FDI, in the wake of current account deific along with the fund shortage problems in the domestic aviation sector has compelled the government to support the Etihad’s investment in India’s aviation sector.
The deal is now should get the sanction of the Competition Commission of India.