New Delhi: Doing business in India is not without serious troubles. There can be many risks.
Businesses attracted by relatively cheap labour discover that infrastructure costs can be astronomical; navigating through complex government policies and procedures can be frustrating; enforcing contracts is bothersome; and once you have fulfilled the requirements, the goalposts may change.
India’s market size is big and major players in any sector cannot resist the temptation of setting up a presence in India.
For large enterprises it’s easier than small or medium-size businesses to operate in the difficult terrain. But that is not always the case as becomes clear from the Indian police’s investigation against AirAsia Group Chief Executive Officer Tan Sri Tony Fernandes and a few other people over their alleged violation of rules in setting up AirAsia India Ltd (AAIL).
The venture involves Asia’s biggest budget airline and Tata Sons, India’s largest conglomerate.
AirAsia Bhd owns 49 per cent, the maximum a foreign entity is allowed under Indian aviation laws, of AirAsia India, while another 49 per cent is owned by Tata and the remainder is held by two Indian shareholders.
India’s Central Bureau of Investigation (CBI) on May 28 registered a case alleging that Fernandes and other individuals broke rules in getting various permits for setting up and running the airline.
Some of the charges reflect the allegations made by the Federation of Indian Airlines (FIA), representing local carriers IndiGo, Jet Airways, SpiceJet and GoAir, which opposed AirAsia India’s entry into the Indian market.
Hindu nationalist Bharatiya Janata Party (BJP) leader Subramanian Swamy has been a prominent detractor of AirAsia’s India venture. He calls it an “illegal” airline and praises the Indian investigative agencies for doing “good work” in the case.
The Indian regulators, foremost being the Foreign Investment Promotion Board, Directorate General of Civil Aviation, and the Ministry of Civil Aviation, found everything in order to allow commercial operations by the airline in mid-2014.
The airline has achieved significant growth in four years. With a fleet size of 18 A320 aircraft and a network of 19 destinations served from its hubs in Bengaluru, New Delhi and Kolkata, it is a well-established market player.
AirAsia India also plans to launch an initial public offering (IPO) of shares and start foreign flights when its fleet expands to a minimum 20 aircraft in the domestic market.
According to one allegation in the CBI report, there were unfair lobbying efforts to get rid of India’s so-called “5/20” rule to enable AirAsia India to start early international operations.
The rule stipulated that an India-based carrier must complete five years of continuous operations and deploy 20 planes in the home market before flying abroad.
It is well-known that the rule hobbled the sector and the government changed it and several other laws in 2016 to make India more attractive to aviation investors.
04/06/18 New Straits Times
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Businesses attracted by relatively cheap labour discover that infrastructure costs can be astronomical; navigating through complex government policies and procedures can be frustrating; enforcing contracts is bothersome; and once you have fulfilled the requirements, the goalposts may change.
India’s market size is big and major players in any sector cannot resist the temptation of setting up a presence in India.
For large enterprises it’s easier than small or medium-size businesses to operate in the difficult terrain. But that is not always the case as becomes clear from the Indian police’s investigation against AirAsia Group Chief Executive Officer Tan Sri Tony Fernandes and a few other people over their alleged violation of rules in setting up AirAsia India Ltd (AAIL).
The venture involves Asia’s biggest budget airline and Tata Sons, India’s largest conglomerate.
AirAsia Bhd owns 49 per cent, the maximum a foreign entity is allowed under Indian aviation laws, of AirAsia India, while another 49 per cent is owned by Tata and the remainder is held by two Indian shareholders.
India’s Central Bureau of Investigation (CBI) on May 28 registered a case alleging that Fernandes and other individuals broke rules in getting various permits for setting up and running the airline.
Some of the charges reflect the allegations made by the Federation of Indian Airlines (FIA), representing local carriers IndiGo, Jet Airways, SpiceJet and GoAir, which opposed AirAsia India’s entry into the Indian market.
Hindu nationalist Bharatiya Janata Party (BJP) leader Subramanian Swamy has been a prominent detractor of AirAsia’s India venture. He calls it an “illegal” airline and praises the Indian investigative agencies for doing “good work” in the case.
The Indian regulators, foremost being the Foreign Investment Promotion Board, Directorate General of Civil Aviation, and the Ministry of Civil Aviation, found everything in order to allow commercial operations by the airline in mid-2014.
The airline has achieved significant growth in four years. With a fleet size of 18 A320 aircraft and a network of 19 destinations served from its hubs in Bengaluru, New Delhi and Kolkata, it is a well-established market player.
AirAsia India also plans to launch an initial public offering (IPO) of shares and start foreign flights when its fleet expands to a minimum 20 aircraft in the domestic market.
According to one allegation in the CBI report, there were unfair lobbying efforts to get rid of India’s so-called “5/20” rule to enable AirAsia India to start early international operations.
The rule stipulated that an India-based carrier must complete five years of continuous operations and deploy 20 planes in the home market before flying abroad.
It is well-known that the rule hobbled the sector and the government changed it and several other laws in 2016 to make India more attractive to aviation investors.
04/06/18 New Straits Times
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