Abu Dhabi has promised to invest US$50 billion in India’s cash-hungry infrastructure at a time when growth in Asia’s third-largest economy has sharply slowed, a newspaper reported yesterday.
The pledge by Abu Dhabi was the key factor in pushing New Delhi to approve a bilateral deal to increase the number of flights between India and the United Arab Emirates (UAE), an Indian official told the Indian Express.
“A commitment to invest US$50 billion in the infrastructure sector of the country by Abu Dhabi was a key reason for us to agree to the increase,” said a senior government official, who declined to be named.
News of the investment comes just months after the IMF in February criticized New Delhi for not improving its creaky infrastructure during the period it experienced economic growth rates close to double figures.
The plan to increase flights between the UAE and India is linked to a controversial proposal by the Abu Dhabi-based Etihad airline to purchase a 24 percent stake in India’s Jet Airways for 20.5 billion rupees (US$342 million).
That deal, the largest foreign investment proposal in India’s aviation sector, faces regulatory hurdles, with many ministries raising objections over the bilateral increase in flights, as well as over control of Jet after the sale.
“The increase was arrived at based on the request for a hike in entitlements made by various carriers, including Jet,” the government official said.
Many of the new seats — a nearly three-fold jump from 13,000 to 36,600 — would go to Jet and Etihad.
India’s opposition has alleged that the increase in flights is aimed at clinching the Jet-Etihad sale and could divert vital business from ailing state-run flagship Air India.