New Delhi: The Cabinet Secretary has called a meeting of secretaries to discuss the Jet-Etihad deal on Prime Minister Manmohan Singh's instructions and sources have told CNN-IBN that this big ticket deal could be put into cold storage. Sources have said the PMO has asked Ministry of Civil Aviation to look into concerns in the deal even as Aviation Minister Ajit Singh, who is in favour of the deal, has threatened to walk out of the government if it doesn't go through.
The Prime Minister's Office has also asked Finance and Commerce Ministry to clarify matter. The PMO is being cautious of another 2G-like controversy which could drag in PM Manmohan Singh, sources said.
An inter-ministerial group, headed by Finance Minister P Chidambaram had flagged off three concerns of the deal. First concern was that the deal favours Abu Dhabi-based Etihad Airways over Jet. The government is also concerned over who will have effective control once the deal materialises. Another concern is who will have financial control of the company once the transaction goes through.
The deal, largest foreign investment proposal in the aviation sector, is facing regulatory hurdles with various ministries raising major concerns over the ultimate control of Jet Airways post transaction. Janata Party president Subramanian Swamy and BJP leader Jaswant Singh had written to Prime Minister Manmohan Singh raising questions over the deal.
The Foreign Investment Promotion Board (FIPB), which clears FDI proposals, on June 14 had deferred a decision on the deal citing control and ownership issues. "It (Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership," Economic Affairs Secretary Arvind Mayaram had said.
Under the proposed transaction, Jet would sell its 24 per cent to Etihad Airways. Concerns have been primarily raised on the proposed ownership and control structure of the domestic airlines.
Besides, capital market regulator Sebi, fair trade watchdog CCI and Department of Industrial Policy and Promotion (DIPP) also have reservations about the deal. Post transaction, Jet Airways promoter Naresh Goyal would directly own 51 per cent in the airline.
The FDI policy for civil aviation, which was revised in September 2012, allows foreign airlines and foreign institutional investors to invest up to 49 per cent in an Indian airline. NRIs are already allowed 100 per cent investment.
(With Additional Inputs From PTI)