SINGAPORE - The runway has been cleared for Singapore Airlines (SIA) to set up a New Delhi-based carrier with Indian conglomerate Tata.
A proposal for SIA to take a 49 per cent stake, with Tata absorbing the remaining 51 per cent, was approved on Thursday by India's Foreign Investment Promotion Board (FIPB). "It has been cleared," Economic Affairs Secretary Arvind Mayaram told reporters after the board met in India.
SIA spokesman Nicholas Ionides said in Singapore: "We have yet to be informed by FIPB. However, we are very pleased with the reports of approval."
The next step is for SIA and Tata to get the permits needed from India's civil aviation authority.
Aviation analysts expect the new airline to take to the skies by the third quarter of next year.
Mr Kapil Kaul, who heads the India office of the Centre for Asia Pacific Aviation, said: "I do not expect any setbacks for the venture from this point onwards."
Getting the official nod for the US$100 million (S$124 million) start-up is a triumph for SIA and Tata, in what is their third attempt in two decades to gain a foothold in India's air travel market. Earlier bids were quashed by fierce political opposition and local carriers crying foul.
After years of keeping out foreign carriers and investment, India saw a key change in September last year. The government - which had previously barred foreign carriers from taking equity stakes in local airlines - changed the law to allow foreign holdings of up to 49 per cent.