Malaysian budget carrier AirAsia on Wednesday got the finance ministry's approval for its
proposal to enter India through a joint venture with Tata Group and another company.
Late last month, AirAsia's investment arm AirAsia Investment had moved an application with the Foreign Investment Promotion Board (FIPB),
seeking approval for the JV in which AirAsia would hold 49 per cent stake, with the rest being held by Tata Sons (30 per cent) and Arun Bhatia's Telstra Tradeplace holding 21 per cent.
A day after reports revealed that the aviation ministry has expressed its reservations about the proposal, saying the new company should have been formed before approaching the government for approval, FIPB approved the airline's India entry at its meeting in the national capital.
"AirAsia's proposal has been cleared. It is as per the policy (which allows) up to 49 per cent FDI. Rs 80 crore is initial investment," a senior government official said.
The carrier will now have to approach the aviation regulator Directorate General of Civil Aviation (DGCA) for further clearances.
Media reports have revealed AirAsia Group CEO Tony Fernandes' plans to
kick off his airline in the country as early as May-June, instead of his earlier plans towards the year-end.
Fernandes had said the new airline would be based in Chennai and in the initial phase would concentrate on destinations in the south where AirAsia already operates and would also focus on providing connectivity to small towns.
This would be the
first entry of a foreign carrier in the domestic aviation sector after the liberalisation of the foreign direct investment (FDI) policy in September last year.
With inputs from PTI
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