New Delhi, February 20
Malaysia's AirAsia Bhd, Asia's biggest budget carrier, said on Wednesday it is seeking approval to establish a joint venture involving unlisted Indian firms Tata Sons Ltd and Telestra Tradeplace Pvt Ltd.

"We have carefully evaluated developments in India over the last few years and we strongly believe that the current environment is perfect to introduce our low fares," AirAsia chief executive Tony Fernandes said in a statement.

AirAsia, through its investment arm, AirAsia Investment Ltd, intends to own 49 percent of the new airline with the remaining stake held by the two Indian firms. The venture plans to operate from Chennai and provide domestic flight options, said AirAsia.

The news comes after the carrier denied last year it was bidding for a stake in SpiceJet Ltd, the country's second largest budget airline.

India's aviation industry, which has seen continued losses due to high operating costs and regulatory uncertainty, was opened to foreign investors in September last year. Foreign carriers are now able to purchase up to 49 percent of local airlines.

No foreign airline has bought a stake in a local carrier since India relaxed investment rules. The United Arab Emirates’ Etihad Airways is in talks to buy a stake in Jet Airways, but no agreement has been reached. Sources previously said it makes more sense for foreign carriers to start an airline with a local partner so they don't have to assume the debt of an existing Indian airline.

AirAsia presently flies to four south Indian cities and Kolkata in addition to 20 countries across Asia and has indicated it plans to slow its overall expansion elsewhere.

AirAsia X, the long-haul carrier found by Fernandes, last year pulled out of India due to poor demand and profitability.

India's two biggest cities, Mumbai and Delhi, were taken off the AirAsia network last year due to a failure to access local distribution lines, according to market researcher the Centre for Aviation (CAPA).

"Securing the right local partner could resolve many of the challenges AirAsia has faced in serving India from its home markets," CAPA said in a report. — Reuters

New Delhi, February 20
Flag carrier Air India will be compensated by aerospace major Boeing for battery trouble plaguing its Dreamliner 777 planes, which have been grounded throughout the world, including India.

Discussions on the issue will take place later but Civil Aviation Minister Ajit Singh assured on Wednesday there would be some compensation for India. “We’ll discuss with Boeing only when the things settle down,” he said.

However, ruling out a time-frame for the discussion on compensation, he said there could not be a time frame for safety issues. After the problems are fixed the US Federal Aviation Administration has to certify the planes after which they will also have to get a green signal from civil aviation regulator DGCA.

Air India is operating Boeing 777s on the routes earlier operated by Boeing 787 Dreamliners. AI chairman & MD Rohit Nandan said differences between operating costs would also be compensated by the manufacturer but refused to give any ballpark figure for the amount. All the 50 Dreamliners delivered to airlines across the world, including six of Air India, have been grounded following incidents of fire and smoke in the aircraft’s lithium ion batteries.

Meanwhile, Nandan claimed Air India's financial performance and cash flow had improved considerably. “Despite grounding of the Dreamliners since January and a 2-month strike by pilots last year, we expect earnings before interest, taxes, depreciation and amortization) to be positive this fiscal”, he said.

New Delhi, February 20
The Associated Chambers of Commerce & Industry of India (Assocham) said Wednesday the loss to India’s gross domestic product incurred by the two-day nationwide strike by trade unions would be more than the initial estimates as almost 50 per cent of the country’s economic activity has been hampered.

Against the earlier estimates of Rs 15,000-20,000 crore, the GDP may be eroded by about Rs 26,000 crore, it is apprehended, based on the damaging effect of the strike on the industrial activity and the services sector like banking, finance.

The financial capital of Mumbai has been hit badly.

In most of the industrial states and enclaves the attendance was poor leading to curtailing of productions shifts. With city transport being affected adversely, the footfalls in the retail trading markets also considerably declined, even though some of the markets remained opened.

“In the wake of more than expected disruption, we estimate the loss to the GDP in today and tomorrow’s strike to be in the region of Rs 25,000 to Rs 26,000 crore — near 50 per cent of the economic activity,” Assocham said.

Expressing concern over the several incidents of violence and burning public and private property, the apex chamber appealed to the labour union leaders to prevail upon their rank and file and ensure that the ugly incidents do not take place.

“Such incidents completely shake confidence of the industry and the market for which security and peace is of paramount importance. Besides, retail customers choose to stay indoors leading to considerable fall in the trading business — the lifeline of the country’s economy” said chamber president Rajkumar Dhoot.

The Assocham analysis apprehends the loss to India’s economy will work out to about Rs 13,000 crore or more on Wednesday itself.

“The economy at this point of time is battling a slowdown — both domestic and global — and cannot afford disruption. The strike will dent the market confidence as well”, Dhoot added.

The industry body said that reports from different parts of the country suggested that the banking sector was the worst hit followed by local transport. Both small and big retail trade had less of footfalls.

The situation in the vegetable wholesale markets is expected worsen on Thursday and it is feared prices of fresh eatable items like vegetables, milk, bread, eggs and meat may increase ,hitting the common man who is already reeling under inflation.

New Delhi, February 20
Faced with declining sales in the current fiscal due to high interest rates, rising fuel costs and input costs, the automobile industry is looking at some relief from the government in the upcoming budget to help it ride out of the tough situation it is in.

While experts point out that pragmatic approach by the finance ministry to deal with the issues faced by the industry will provide the much-needed relief to the auto industry, the industry itself has demanded a cut in the excise duties to previous levels and policy stimulus.

The industry is looking for excise duty structure as stated in the auto policy and the 10-year Auto Mission Plan. It also wants an equivalent GST to be applicable at 10% flat across all segments such as cars, two-wheelers and commercial vehicles.

While hoping that the finance minister refrains from imposing an additional levy on the personal auto segment, which would bring some relief to auto industry, the automobile manufacturers are hopeful that there would be some reduction of excise duty and service tax on passenger cars and two-wheelers to encourage consumer buying.

Experts say any further proposed hike in excise duty and service tax could push the economy back into the inflationary mode. The steep increase in the excise duty for large cars would lead auto players dealing in big cars to relook at their budgets.

Automakers want duties that are prevailing between 24% to 27% to be reduced to a uniform 22% irrespective of size of the vehicle and its engine displacement.

In the period between April 2012 and January 2013, the overall growth in domestic auto sales was 4.66% compared to 12.24% in FY2011-12.

The Society of Indian Automobile Manufacturers (SIAM), a lobby group of automakers, has already announced that its previous forecast of a three to five per cent overall growth in FY 2012-13 may require a downward revision. SIAM plans to revisit the forecast once the 2013-14 budget has been announced later this month.

The auto sector is one of the most important sectors in manufacturing, forming around 6% of India's GDP.

Experts point out the Indian auto industry was expected to attain a turnover of $145 billion, around 10% of GDP, by 2016. But the prevailing conditions may not allow that now. They say the government should strive for early introduction of GST which would pave the way for rationalizing the tax structure.

Given this, all eyes are now pinned on what Finance Minister P. Chidambaram has to offer to the auto industry, which needs a shot in the arm for its survival.