Tuesday, January 16, 2007

Mother of all mergers in Indian skies nears take-off

New Delhi: The group of ministers (GoM) on Monday “broadly approved the merger of Air India and Indian, taking a big step towards materialising the mother of all mergers in the Indian skies.
However, the GoM, headed by defence minister Pranab Mukherjee, put off a final decision till human resources (HR) issues are resolved in consultation with the employees of the two corporations.
Civil aviation minister Praful Patel said he would undertake a dialogue with the employees of the two corporations within a week and the GoM will meet in a fortnight to give the final go-ahead for the merger, which then can be effected before the beginning of the next financial year.
The GoM, Patel said, endorsed the recommendations of the committee of secretaries (CoS) on the two key issues of income-tax and stamp duty. The revenue department has indicated that it will make the necessary exception under Section 72A of the Income-Tax Act to ensure that the merger of Air India and Indian into a new corporation does not impose a tax burden.
On stamp duty payable to state governments on transfer of assets, the GoM noted that the estimated burden of about Rs 50 crore is “well within the merger costs” of Rs 150 crore.
16/01/07 Priya Ranjan Dash/Daily News & Analysis