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April 23, 1997


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Why did C M Ibrahim scuttle the Tata-SIA project?

C M Ibrahim Civil Aviation Minister Chand Mahal Ibrahim, who is also the information and broadcasting minister, effectively scuttled the Tata-SIA proposal while the fate of STAR TV's DTH service still hangs in the balance.

They were the two most controversial decisions taken by the Deve Gowda government. One of them has become policy while the fate of the other still hangs in balance. Yet, irrespective of what happens to the Deve Gowda government, C M Ibrahim may well rest a happy man.

In what was his last week as minister for civil aviation and information and broadcasting in the deve Gowda regime, Ibrahim swung two key decisions. One: He got the Cabinet to pass the aviation policy drafted by his ministry which effectively scuttled the Tata-Singapore Airlines proposal. And two: he banned Sky TV's direct-to-home (DTH) television service.

Singapore Airlines At a hurriedly-called press conference, Ibrahim acted as though both decisions had been prompted by patriotic considerations. But of course, there were those who suggested that he had been motivated by a desire to protect the two major Indian players in both sectors: Naresh Goyal's Jet Airways and Zee TV's beleaguered chief Subhash Chandra Goyal.

The decision on Tata-Singapore had long been expected. "Nowhere in the world are foreigners allowed to enter the domestic sector," Ibrahim said. "Would you like an airline owned by China in your domestic sector? What if there is a war tomorrow?" asked Yogesh Chandra, the civil aviation secretary.

Predictably, the move has upset the Tatas. The Tatas said they had not been officially informed by the ministry. "We will decide the course of action only after we get the formal notification," said Ravi Dubey, vice-president, corporate relations, Tata group. However, Sujit Gupta of Tata Industries has already left for Singapore to sort out issues.

The Tata-SIA project goes back to 1995 when it was submitted to the Foreign Investment Promotion Board. However, the then minister for civil aviation, Ghulam Nabi Azad, was not keen on the project. Accused of giving licences to numerous private operators indiscriminately, Azad had ruled out allowing any more private airlines. The proposal gathered dust for almost two years till finally, in December last year, the FIPB cleared it in a sudden and unexpected move and forwarded it to the Cabinet Committee on Foreign Investment.

Jet Airways But before the Tatas could rejoice came the first hitch. The CCFI refused to clear the project and referred it to the civil aviation ministry. But Ibrahim had already begun to voice his objections to the project. Ratan Tata, now very hopeful, met Ibrahim in February, and a couple of days later held a press conference to announce the details of the project. But word was already out that Ibrahim was only waiting for the right time and manner in which to throw the Tata-SIA proposal out.

Meanwhile, debate raged on as to whether it was sensible to allow foreign airlines to have the run of domestic aviation. Aren't there certain areas of geopolitical importance that should be reserved for Indians? Ibrahim let things hang till after the Congress withdrew support.

The civil aviation policy was cleared by the Cabinet on April 1.

Ratan Tata The aviation policy forbids any foreign airline or airport authority from entering the domestic aviation sector. Those with existing foreign airline or airport participation have been given six months to divest the equity.

That day, Naresh Goyal must have been the most relieved man in the country. This time, Tata-Singapore had seemed on the verge of being cleared. Goyal's Jet Airways is the only private airline in the country managing to break even. And despite Planning Commission projections on growing demand, with Jet Airways and the state-owned Indian Airlines already in operation, there wasn't enough place for three big players to survive.

Kind courtesy: Sunday magazine

C M Ibrahim, continued