Karnataka has advised the Ministry of Civil Aviation (MoCA) to issue “security clearance“ to billionaire Prem Watsa’s proposed investment in Bangalore International Airport (BIAL) in an effort to speed up an FDI proposal that has been flying back and forth between Bengaluru and New Delhi.
The traffic volumes at BIAL have surpassed the projections, calling for speedy addition of a second terminal.But the delay by the Centre could be holding up key capital investment decisions at the BIAL due to the uncertainty the indecision has created, people aware of the development said.
Watsa’s Toronto-based Fairfax Group had, in March last year, announced its decision to buy a 33% stake in BIAL from GVK Group for Rs 2,182 crore ($321 million), valuing the eight-year-old airport at about Rs 6,600 crore. A month later, Fairfax signed another deal to buy 5% stake held by Flughafen Zurich AG in BIAL. The investment proposal, however, has been hanging fire with MoCA seeking one clarification after another from the state, conveying an impression that decisions over FDI proposals consumed their usual time despite the Centre’s claims of speedy clearance.
Technically, a state government has no say in matters relating to security clearance to a foreign investor as it depends more on the relationship between two countries. Karnataka had declined to of fer an opinion on the grounds that the subject fell completely in the domain of the Ministry of Home Affairs.
The BIAL had, on May 11, 2016, wrote to MoCA requesting that “security clearance“ be given to new investors. The MHA, for its part, communicated its nod to MoCA sometime ago, which chose to vet the FDI proposal further, and insisting on an opinion from Karnataka on security as well as other issues.
The state had declined an opinion in the past, but has now chosen to advise the MoCA to communicate the MHA nod to BIAL.
The MoCA ‘s delay on Watsa’s investments in airport sector has raised eyebrows because his Toronto-based group is an existing investor in India with stakes in Thomas Cook and Quess Corp. Just a few days ago, the RBI approved another investment proposal from Fairfax to pick up 51% in the Kerala-based Catholic Syrian Bank. “I don’t understand why the MoCA should drag the subject so much because Watsa is person of Indian origin who is running successful businesses in Canada and other countries,“ said R.Ramakrishnan, a practising chartered accountant.
The Bengaluru airport recorded the largest growth at 22.4% in passenger and cargo traffic in the January-September period compared to other large airports by handling 11million passengers. Nevertheless, the BIAL is yet to take a call on award of contracts like airport operations, management and services possibly awaiting clarity on the fate of the FDI proposal. Randall Cunningham Womens JerseyShare This