The Foreign Investment Promotion Board (FIPB) has approved the proposal by Tata Group and Singapore Airlines to invest in a full-service joint venture airline company in India, with the Tata Group as the major shareholder.
Economic affairs secretary Arvind Mayaram told reporters after a meeting of the FIPB today that the government has given the green signal to Singapore Airlines' proposal to start an aviation venture with Tata Sons, entailing an initial foreign investment of $49 million. He did not give any details.
"It has been cleared," Mayaram said, adding that there are no riders attached to the project clearance.
Tatas will have majority ownership in the joint venture with 51 per cent interest while Singapore International Airline will own the remaining 49 per cent stake.
The JV airline needs a slew of other regulatory approvals before it can start operations.
The ministry of corporate affairs had, early this week, approved the use of the name `Tata SIA Airlines Ltd' for the proposed airline venture between the Tata Group and Singapore International Airlines.
The two airlines have assured the government that that majority control of their proposed venture would always remain in Indian hands.
The partners will now submit other documents such as the share capital of the proposed venture, composition of the board of directors, articles of association, areas of operation, etc with the concerned regulatory authorities.
Tata SIA Airlines will be among the first major companies to be incorporated under the new Companies Act, 2013, that came into effect earlier this month.
The joint venture, which will have an initial investment of $100 million, expects to take off next year after all government and regulatory approvals are obtained.
The Tata group has another joint venture with Malaysia's AirAsia, in which it owns 31 per cent stake with the Malaysian carrier holding 49 per cent and Arun Bhatia's Telestra Tradeplace, the third partner holding 20 per cent.
Mayaram also said the FIPB approved a foreign direct investment proposal by a unit of SingTel, but did not elaborate.
The SingTel unit wants to increase its stake to 100 per cent in a long-distance phone business in India by buying out stakes held by its local minority partners, after the government removed a 74 per cent foreign holding cap in telecom companies.