The Securities Exchange Board of India (Sebi) approved the purchase after the two airlines made revisions to the deal to meet conditions set by the regulator, the Press Trust of India reported yesterday.
Etihad and Jet both declined to comment on the report. Sebi could not be reached for comment.
The stake sale, which was announced in April, has been repeatedly delayed as the airlines have awaited regulatory clearances in India, following objections from Sebi and the Competition Commission of India.
Sebi was satisfied that Jet would not relinquish significant control to Etihad following the changes and Etihad would not be required to make an open offer to Jet’s shareholders, the Press Trust of India stated.
The deal still needs to be approved by India’s Cabinet Committee on Economic Affairs. The agreement was cleared by India’s Foreign Investment Promotion Board in July, with some conditions.
At the beginning of September Etihad extended the deadline for the second time for regulatory approvals on the Jet deal to the end of the month. That deadline lapsed on Monday.
Under the deal, Etihad would become the first foreign carrier to buy a stake in an Indian airline after the government in New Delhi last year permitted investment of up to 49 per cent in the country’s carriers for the first time.
Challenges have also arisen about the links between the proposed stake sale and an increase in capacity rights between India and Abu Dhabi, which some argue will harm the interests of India’s aviation sector.
A petition filed in the Supreme Court last month by Subramanian Swamy, a senior politician in the Bharatiya Janata Party, India’s main opposition, alleged that the deal was unfairly linked to an increase in capacity rights in a bilateral agreement between India and Abu Dhabi.
The Indian government last month approved an increase in the seat capacity between Abu Dhabi and India to 50,000 a week by 2015 from 13,300 a week.
The petition’s allegations were that “… there has been a grant of largesse of national asset in favour of a foreign airline [Etihad Airways], resulting in undue enrichment and enormous pecuniary advantage to such foreign airline at the cost and expense of the public, national and domestic airlines as well as airports.”
It claimed that the bilateral agreement would result in huge losses to Indian airlines and airports.
Etihad last month said that it intended to increase its number of seats and flights into India, including tripling the capacity on its routes between Abu Dhabi and Mumbai and New Delhi.
By the end of this year, Etihad plans to increase its flights between Abu Dhabi and Mumbai and Abu Dhabi and New Delhi from daily to double-daily, it said. It also wants to use wide-bodied Airbus aircraft for some of the flights and larger aircraft for its Chennai flights.