The Cabinet Committee on Economic Affairs Thursday approved the agreement between Jet Airways and Abu Dhabi-based Etihad Airways for a proposed 24 percent stake sale in the Indian passenger carrier.
"Cabinet Committee on Economic Affairs today (Thursday) gave its approval to the proposal of Etihad Airways for subscribing 2,72,63,372 equity shares of Jet Airways," the CCEA said in a statement.
"The Foreign Investment Promotion Board (FIPB) has recommended the proposal. The approval would result in foreign investment amounting to Rs.2,057.66 crore in the country."
Recently, the stock market regulator Securities and Exchange Board of India (SEBI) gave its approval for the deal following FIPB recommendations.
The FIPB gave a conditional nod to the proposed 24 percent stake-sale in Jet to Etihad Airways July 29, 2013, and this will now be taken up by the cabinet for final approval.
The conditional approval by FIPB came after the Jet Airways submitted an amended shareholding agreement to the finance and civil aviation ministries. This agreement is said to have addressed the control and management issues, with Etihad agreeing to have only two places on the board of directors from earlier proposed four in the 10-member airline board.
"Addressing the concerns, the applicant companies have revised their agreement. Comments of SEBI have also been received by FIPB. The proposal was considered by the FIPB at a meeting held on July 29 and the same is currently being prepared for submission to the competent authority," Ajit Singh informed Lok Sabha in a written reply.
Apart from government agencies like SEBI, some parliamentarians and political parties, including the opposition Bharatiya Janata Party (BJP), had voiced opposition to the deal and sought an explanation from Prime Minister Manmohan Singh.
There are also allegations that the government had given concession to the deal by exponentially increasing flying rights between Abu Dhabi and India through the new bilateral air service agreement (BASA).
The Prime Minister's Office (PMO) said concerned departments and agencies would look into the proposal and would deal with it as per usual practice.
Jet Airways is currently looking forward to attract foreign investments from Abu Dhabi-based airline through a stake sale deal.
The deal is expected to garner around Rs.2,058 crore (USD 379 million) for Jet Airways, which will enable the company to service its debts and provide passengers better connectivity.