NEW DELHI: The humble comma has come to the rescue of a joint venture between the

and

. The Foreign Investment Promotion Board’s (

) interpretation of the intent behind the placement of a comma has ensured the clearance of the

venture between

, Tata Sons and Telstra

despite objections from civil aviation ministry officials that the proposal was not consistent with the foreign direct investment policy.

TatasAirAsiaFIPBRs80-croreAirAsiaTradeplaceIn the FIPB meeting on Wednesday, aviation ministry officials argued that current policy allows a foreign airline to invest only in an existing carrier and not a greenfield one, but officials of the finance ministry and Department of Industrial Policy and Promotion (DIPP) asserted that Press Note 6 issued in September last year allows such investment.“It’s been cleared,” said Arvind Mayaram, secretary, Department or Economic Affairs in the finance ministry. “They will have to take the necessary licences from aviation regulator DGCA and can start operating once they get the licence,” he said. Two people familiar with the FIPB deliberations said finance ministry and DIPP officials explained that a strategically placed ‘comma’ in a government order issued in September last year allowed fresh investments in the sector as a whole and not just in existing airlines.“The government of India has reviewed the position in this regard and decided to permit foreign airlines also to invest, in the capital of Indian companies, operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital,” says Press Note 6 issued by the Department of Industrial Policy and Promotion on September 20 last year. In coming to its decision, FIPB has given weight to the part of the press note that says ‘in the capital of Indian companies, operating scheduled…’ while allowing the investment.Had the comma not been there after the word ‘companies’, the policy would have meant that foreign airlines were permitted to invest only in Indian companies already operating air transport services. The new venture proposed by AirAsia and the Tatas would not have been eligible then. Ratan Tata, who is the Tata Group’s chairman emeritus, hailed the approval.“FIPB approval of the airline project between Tatas, Air Asia and Bhatias reflects the true investor-friendly policies of the government. This and other similar actions will, without doubt, reinforce investor confidence in India. I applaud the government for its transparency and its principled implementation of the stated policy,” he tweeted from Geneva, where he is attending an automobile industry event.Malaysia-based AirAsia is Asia’s largest budget airline, and rejection of its proposal would have immediately fed into the narrative that India was a hard place to do business in. Civil aviation ministry officials, however, continue to insist their interpretation is right. “We have nothing against the proposal but what has actually been done is a change in the interpretation of a Cabinet decision. It is clear what the Cabinet-approved policy is and now they think it is different,” said an aviation ministry official.Civil Aviation Minister Ajit Singh, who has already expressed reservations about the proposal, said the policy needed to be clarified, but said his ministry was not opposed to the Tata-AirAsia venture. “Our representative in the FIPB meeting pointed out what the notification was. If they think it right, the commerce ministry will have to issue a clarification to the policy later,” he said.The airline will be managed by AirAsia and based in Chennai. AirAsia will have a 49% stake in the airline while Tata Sons will hold 30%. Arun Bhatia of Telstra Tradeplace will hold the balance 20%. But given the manner in which the proposal has been approved, final clearances may not come easily. “They (AirAsia) still have to come to the aviation department to get air operating permit or bring aircraft into this country,” said a civil aviation ministry official. Existing airline companies are not happy with the proposal, fearing a new carrier will intensify competition in the already troubled sector. “The intent of the policy was to better the lot of the existing carriers. This new airline is not in keeping with this policy,” said the CEO of a leading carrier. Sector experts, however, welcomed the new airline.“The tragedy with this country is that policies are made for specific players. How does it matter if a new airline is being set up instead of money pouring select carriers?” said Sanat Kaul, an ex-bureaucrat who served in the civil aviation ministry and is now chairman of the International Foundation for Aviation, Aerospace & Development (India Chapter).“FDI policies should never restrict entry of new players in the market unless there’s a threat to our national interest. Enhanced competition will bring in greater efficiency and innovation. The resultant pressure on yields may also lead to consolidation in the next 12-24 months. Given the structural problems of the sector and the general slowdown in the economy, India cannot have more than 3-4 strong national-level airlines,” said Amber Dubey, partner and head-aviation at global consultancy KPMG.