The Foreign Investment Promotion Board (FIPB) has deferred a decision on Gulf carrier Etihad Airways' planned 24 per cent stake buy in Jet Airways, the country's Economic Affairs Secretary Arvind Mayaram said on Friday.
It was deferred because Jet Airways has to reply to some queries by market regulator Securities and Exchange Board of India (Sebi) on holding pattern of the merged entity, sources told NDTV.
Also, the Civil Aviation Ministry and Ministry of Corporate Affairs have asked Jet's board as to how many Indian directors will be on board of directors of the new entity.
Sources say these issues can be resolved once the two boards - Jet and Etihad - meet and work out a fresh agreement.
FIPB clearance will be taken up only after these issues are resolved, the sources added.
The board has sought more details on "effective control" and ownership, Arvind Mayaram said.
After the FIPB, which clears foreign direct investment proposals, the deal will also need approval from the Cabinet Committee on Economic Affairs (CCEA).
In April, Jet Airways announced that it was selling 24 per cent of its equity to Abu Dhabi-based carrier for $370 million (Rs 2,058 crore), Etihad, to tide over its operational losses.
Earlier this week, Jet Airways shares fell sharply after two senior MPs alleged that the government's decision to increase the number of flights between India and Abu Dhabi was aimed at facilitating the Jet-Etihad deal.
A Parliamentary panel-led by CPI-M's Sitaram Yechury has also objected to the bilateral air agreement with Abu habi to increase the number of flights between the two counties.
India's bilateral agreement to increase flights to and from Abu Dhabi was signed in April around the same time the Jet-Etihad deal was announced.
The Parliamentary panel has noted that this agreement, signed in April this year, will allow Etihad, Abu Dhabi's national carrier, to substantially increase their operations in India. And Abu Dhabi could soon emerge as a hub for international passengers travelling from India to Europe and America. (Read full story here)
However, Jet had terming these allegations as "baseless".
"Jet Airways' valuation was on the basis of its share price. The suggestion that the valuation was 'sweetened' by the bilateral is plainly untrue," India' second biggest carrier by passengers said.
Jet Airways shares closed 9 per cent higher at Rs 470.40 on the National Stock Exchange on Friday, outperforming the broader Nifty, which gained nearly 2 per cent.
(With inputs from Reuters)
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