Bhubaneshwar: Former industry secretary and chairman of the Foreign Investment Promotion Board, Nilmadhab Mohanty , has said the then civil aviation minister C M Ibrahim changed the rules in the last minute to disallow Tata’s proposal to have an airline joint venture with Singapore Airlines (SIA).
“Rules seem to have been altered after we approved the proposal by Tatas and sent it for final nod to the Union Cabinet (United Front government headed by Deve Gowda). Earlier, the rules or guidelines permitted foreign equity up to 40% in domestic air transport services and did not prohibit any foreign airlines to participate in the equity within the overall limit of 40%. At least one domestic airline had such equity when the Tata proposal was recommended. Changing the rules mid-way was like shifting goal posts after the game had begun,” Mr Mohanty alleged.
“You want to get foreign investment also for modern management, which in the air transport sector only a reputed airlines can provide. Therefore, there was no reason to scuttle the Tata proposal which had fulfilled all conditions.”
Mr Ibrahim reacted to the charge by saying his name was being unfairly dragged into this controversy. “Please note that Tata has not said that a minister demanded bribes. He said some industrialist told him that if you pay the minister, it will be done. Many people indulge in loose talk — how am I supposed to respond? I followed the government policy at the time and I was opposed to foreign airlines investing in Indian airline companies and I continue to be opposed to this. There are some sectors where foreign strategic investment is not desirable and civil aviation is one of them,” he said.
18/11/10 Nageshwar Patnaik/Economic Times
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