Tatas, Singapore Airlines not to raise loans in India to capitalise JV

Tatas, Singapore Airlines not to raise loans in India to capitalise

The Tata Group and Singapore Airlines (SIA) have assured the government that the foreign car-rier would not raise any loan in India to capitalise the joint venture (JV) and further funding beyond its $49-million initial invest-ment will come in as per business requirements.

The joint proposal by the two companies submitted for approval of the Foreign Invest-ment Promotion Board (FIPB) makes a strong pitch on the ground that "SIA's investment in India and the operations of the JV company would have the potential for significant foreign exchange earnings in India". The proposal further states that better services at competitive rates would be provided by the new airline, in which the Tata Group would have a majority stake and management control.

The proposal, accessed by Mail Today, states, "The brand SIA is recognised worldwide and the expansion of SIA in India will signal the ability of the country to attract leading names from the international circuit to benefit the Indian market. High foreign investment inflow would further strengthen the civil aviation sector."

The two companies have also assured that the JV, branded Tata Singapore International Airlines, would provide "better services at competitive rates".

Airlines have been jacking up fares since 2011. The introduction of a new airline with a strong fleet would lead to increased competition and lower fares. The proposal also high-lights the job potential that the JV would offer. "Since the JV company will hire Indian resi-dents to assist in establishing its operations in India, this would create jobs especially for young people and provide for their training. This will enhance the development of Indian employ-ees and contributing to human resource development in India.

Further stating benefits that the JV will offer to the economy, the proposal states, "The JV com-pany activities may benefit from economies of scale offered by ven-dors to SIA in relation to procure-ment of aircraft, engineering serv-ices, spares and infrastructure."

The participation, therefore, of an internationally reputed full-service passenger service airline operator in the JV company would increase the competitiveness within the full service at competi-tive rates and overall development of full-service scheduled passenger airline services, the proposal adds.
 JOINT PROPOSAL

• Tata Group and SIA have assured the government that the foreign carrier would not raise any loan in India to capitalise the joint venture
• Further funding beyond its $ 49- million initial investment will come in as per business requirements
• The two companies have submitted a joint proposal for approval of the Foreign Investment Promotion Board
• The proposal says SIA's investment in India and the operations of the JV company would have the potential for significant foreign exchange earnings in India
• The proposal further states that better services at competitive rates would be provided by the new airline, in which the Tata Group would have a majority stake and management control
• The proposal states that the expansion of SIA in India will signal the ability of the country to attract leading names from the international circuit
• High foreign investment inflow would strengthen the civil aviation sector