Jet-Etihad deal: Govt tells UAE, India a safe investment destination

Mumbai: The government has assured the United Arab Emirates (UAE) that India is a safe investment destination, said commerce and industry minister Anand Sharma, who visited the Arab nation earlier this week.

add_main_imageOn Tuesday, Mint reported that the unexpected delay in the plan by Jet Airways (India) Ltd to sell a stake to Etihad Airways relates to the UAE airline’s concern that it may be forced to exit the holding if there’s a policy reversal by the Indian government, citing two aviation ministry officials.

“I understand that two airlines are in talks and it’s a business decision of those airlines,” Sharma said at a Confederation of Indian Industry event in Mumbai on Wednesday.NextMAds

The government has said that all investments will be profitable and fully safe, according to Sharma.

On Sunday, Etihad Airways chairman Sheikh Hamed bin Zayed al-Nahyan said the Abu Dhabi-based airline needed to revise the deal to buy a stake in the Indian airline. It had been expected that the acquisition would be announced during Sharma’s visit to the UAE.

Etihad Airways’ promoters are concerned about the experience of two other Arab carriers, said the ministry officials cited in the Tuesday report in Mint. They added that this was unlikely to scupper the deal.

Kuwait Airways and Gulf Air each bought, in 1993, a 20% stake in Tailwinds Pvt. Ltd, the overseas firm owned by non-resident Indian Naresh Goyal that held all of Jet Airways’ stock at the time. In April 1997, the aviation ministry asked Jet Airways to conform to the rule that overseas airlines shouldn’t hold stock in Indian airlines, resulting in Goyal being forced to acquire the 40% holding.

The rule was only relaxed in September last year, which is when Jet and Etihad began talking. India now allows foreign carriers to hold up to the 49% limit in overseas investment in airlines.

“I did not get any negative indications to the Jet-Etihad deal,” Sharma said in Mumbai. He was among the government ministers that a delegation of the two companies met last week. sixthMAds

He refused to give details on what transpired at his meeting with UAE government officials.

Sharma said the Etihad Airways chairman happened to be the co-chairman of a high-level investment forum and that UAE has agreed to invest $2 billion in Indian infrastructure.