New Delhi: The stake sale process for the grounded Jet Airways could hit the "substantial ownership and effective control" clause of the official civil aviation rules (CAR) and cast a shadow on public sector banks' (PSBs) efforts to fully recover their dues from the debt-laden airline, according to analysts.
"Now, if Etihad teams up with foreign private equity firms or fund houses it will have to ensure that effective control of airline still rests in Indian hands. This will be difficult. Clarity is needed on this," an aviation policy expert said.
The present rules allow 100 per cent foreign direct investment (FDI) into an Indian carrier but the stake ownership of foreign airlines has been capped at 49 per cent.
Besides, the investors have to also comply with the clause of substantial ownership and effective control (SOEC).
Air Asia India, a joint venture of Tata Sons and Malaysian carrier Air Asia, had come under scrutiny for alleged violation of the SOEC clause and had to fight legal battles to prove its Indian control.
Qatar Airways was once keen to set up a local unit in India but could not do so due to the restrictive FDI rules.
25/04/19 IANS/Business Standard
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"Now, if Etihad teams up with foreign private equity firms or fund houses it will have to ensure that effective control of airline still rests in Indian hands. This will be difficult. Clarity is needed on this," an aviation policy expert said.
The present rules allow 100 per cent foreign direct investment (FDI) into an Indian carrier but the stake ownership of foreign airlines has been capped at 49 per cent.
Besides, the investors have to also comply with the clause of substantial ownership and effective control (SOEC).
Air Asia India, a joint venture of Tata Sons and Malaysian carrier Air Asia, had come under scrutiny for alleged violation of the SOEC clause and had to fight legal battles to prove its Indian control.
Qatar Airways was once keen to set up a local unit in India but could not do so due to the restrictive FDI rules.
25/04/19 IANS/Business Standard
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