Govt defers decision on FDI approval for Agusta-Tata JV
03 May 2016
The Indian government has deferred a decision on Tata Sons' joint venture with Italian helicopter manufacturer AgustaWestland a day after a Milan court handed prison terms to former chiefs of Finmeccanica and AgustaWestland on 7 April over bribery charges.
The joint venture, Indian Rotorcraft Ltd (IRL), set up in Hyderabad Aviation SEZ for assembling AW-199Kx helicopters, had sought an increase in its approved FDI of Rs17.6 crore to Rs19.64 crore and a change in the foreign investor from AugustaWestland SpA to Finmeccanica SpA (both Italian firms).
A commerce ministry release announced the cancellation of ''Post-facto approval for the increased FDI inflow of Rs19.64 crore as against the approved FDI inflow of Rs17.6 crore,'' and ''change of the foreign investor from AgustaWestland SpA, Italy to Finmeccanica SpA by way of merger of AgustaWestland SpA, Italy into Finmeccanica SpA.''
Besides the Tata Sons-Finmeccanica proposal, the government deferred decision on four other proposals on the recommendations of the Foreign Investment Promotion Board (FIPB) which met on 8 April 8.
The Central Bureau of investigation (CBI), meanwhile, questioned former IAF chief S P Tyagi over his alleged links to middlemen in the Rs3,600-crore AgustaWestland chopper deal.
While the JV is yet to begin operations, the assembled helicopters were to be exported to the Italian company for sale to customers. IRL, however, holds it has no connection with the IAF purchase of AW101 helicopters, which has now developed into a political battle between the ruling BJP and opposition Congress Party over allegations of payoffs.
According to the commerce ministry release, the IRL proposal was already approved and it was seeking ''post facto approval for the increased FDI inflow of Rs19.64 crore as against the approved FDI inflow of Rs17.6 crore, vide approval letter dated 21 September 2011, and for change of the foreign investor from AgustaWestland SpA, Italy to Finmeccanica SpA by way of merger of AgustaWestland SpA, Italy into Finmeccanica SpA.