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“It [Tata-SIA proposal] has been cleared,” Economic Affairs Secretary Arvind Mayaram said after a meeting of the Foreign Investment Promotion Board (FIPB) in New Delhi.
In their new venture, Tata SIA Airlines Ltd, Tata Group will hold a controlling 51 per cent stake and Singapore Airlines (SIA) will hold the remaining 49 per cent.
According to official figures, India’s domestic air traffic is expected to almost triple by 2020.
Indian low cost airlines like Indigo account for 70 per cent of domestic traffic at the moment.
The venture secured the approval of the Corporate Affairs Ministry last week.
India allowed foreign airlines to buy up to 49 per cent in local carriers in an effort to boost the aviation industry last year.
The country’s FIPB had in july this year cleared a deal allowing Abu Dhabi’s Etihad Airways to buy a 24 per cent stake in one of India’s biggest private airlines, Jet Airways.
The FIPB is an inter-ministerial panel for approving Foreign Direct Investment (FDI) across sectors.
Meanwhile, Tata Group and Singapore Airlines are making an initial investment of $100 million to launch the airline, which may take off next year after getting all the required clearances.
Tata group and SIA have assured the government that control of their venture would always remain in Indian hands, while seeking approval to offer full-service passenger airways on both domestic and international routes.
Singapore Airlines is Asia’s second-biggest carrier by market capitalisation.
Tata Group is India’s biggest business conglomerate.