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Wednesday, September 2, 1998
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Tata airline plan grounded
Tribune News Service

NEW DELHI, Sep 1 — The proposed domestic Tata airline, which has been hanging fire for the past three years for want of government clearance, was finally grounded today with Tata Industries Limited (TIL) withdrawing its application for the Rs 1475 crore project.

"In the absence of a credible time-frame for a decision, the Tatas have withdrawn their application and project", the company said in a statement here.

The Resident Director of TIL here, Mr Sujit Gupta, said despite being in compliance with Civil Aviation Ministry guidelines, the proposal remained on paper due to the inability of four successive governments to implement their own policies.

With the decision, the House of Tatas, which gave India its first airline in 1932, has shelved its plans, as of now, to enter the civil aviation sector. It had earlier pulled out of the Bangalore airport project for similar reasons.

"The airline project stands withdrawn as of now, the same way as the Bangalore airport project", Mr Gupta said.

On Saturday, the Foreign Investment Promotion Board had deferred, for the fourth time, taking a decision on the Tata airline proposal. It announced the proposal would be examined by an expert committee, which would submit its report in six weeks.

"How can an expert committee arrive at a decision on the project within six weeks when the government has not been able to arrive at a decision in three years", Mr Gupta asked.

Mr Gupta maintained that the current proposal for the Tata airline made in December, 1997, was in line with the policy of the Ministry of Civil Aviation and the recent guidelines issued by the Director General of Civil Aviation. The Tatas had withdrawn their earlier proposal to have a joint venture with Singapore Airlines in keeping with the new policy and the fresh proposal envisaged no equity participation and other financial participation (through leasing of aircraft) from any foreign airline, directly or indirectly.

In keeping with the guidelines, the company had given an assurance that it would have no management contract with any foreign airline. The company did not make any request to the government for any exemption from the policy, Mr Gupta said.

The government, on its part, had been under pressure from various quarters, including MPs and the Air Corporation Employees Union. The opponents of the proposal had put pressure on the government not to give approval to the Tatas’ proposal as they feared that its entry would hit the interests of the national carrier, Indian Airlines. The Air Corporations Employees Union, which represents 16,000 employees of Indian Airlines, had threatened to launch a prolonged agitation.

Mr Gupta, however, held the Civil Aviation Ministry solely responsible for being the stumbling block. However, some quarters in the government, particularly the Industry Minister, Mr Sikander Bakht, and a few bureaucrats had been supportive, he said.

The company said the Tata airline proposal had significant benefits for India as it would have given the country a world class airline and an equity investment of Rs 696 crore in an undercapitalised sector prone to disruption. The company had hoped to provide direct employment to about 2400 persons by the fifth year of the operations and indirect jobs to about 10,000 persons.back

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