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BW Businessworld

'I Am Not Opposing Jet-Etihad Deal. I Am Saying Scrap The Bilateral Entitlements'

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A brilliant lawyer. A maverick. An idealist. An outspoken madman. Different people use different terms to describe Subramanian Swamy, 74, member of Parliament who recently joined the Bhartiya Janata party (August 2013). And all the descriptions are probably accurate. As far as politicians go, they don’t come more “politically incorrect” than Swamy. Known to speak his mind freely, many feel that his ability to fit into any party in the long run is in question.
“Swamy” as he is popularly known, is best acknowledged for his various public interest litigations (PILs). His most famous victory was when his PIL into the 2G spectrum auctions resulted in the Supreme Court cancelling 122 licences, and also led to the former telecom minister A Raja being sent to jail. More recently, his PIL against the running and management of Tamil Nadu’s Nataraj temple has resulted in a change in the way such temples and trusts are managed.
Of late, Swamy has been at the forefront of a war against the Jet-Etihad deal and against the entry of both Air Asia India and Tata-SIA. He spoke to BW Businessworld’s Anjuli Bhargava on why he is dead set against these deals, and other matters. Excerpts:
Let me start with the Jet-Etihad deal. Why are you so opposed to it?
The logic behind the policy when it was cleared was that the aviation industry was bleeding and all airlines were making huge losses. Also, the country was facing an economic crunch so it was argued that foreign investment should be permitted.
However, there was a concomitant or parallel agreement between the two governments – India and Abu Dhabi – on bilateral rights. That parallel agreement called for increasing the bilaterals – the seats offered by each side. At that time, entitlements to Etihad were already at 13,000 seats per week but they were using only 8,000.
After the deal, Etihad and Jet were given 90,000 seats. What it would amount to is that Abu Dhabi would become the hub, at the expense of Indian airports. We have letters that show that this agreement was to mollify the Sheikhs of Abu Dhabi for the loss of Etisalat’s telecom licence.
India’s ambassador from UAE wrote a letter saying that the Sheikhs were miffed. Jet’s agreement is partly a consequence of what happened.
Traffic is leaving India through Dubai on Emirates Airlines anyway. At least this way, all the gains don’t go to non-Indian companies. The Jet-Etihad deal would benefit at least one Indian company…
True. Emirates has become one of the strongest airlines and is very profitable – a lot of it on the strength of India traffic. This is sabotage because all the profitable routes of Air India were discontinued so that Emirates could get them.
Now with Etihad joining in this game, all these airports you have built (in Delhi and Mumbai) will be just a waste of money.  Indians will fly out of Abu Dhabi or Dubai and Indian airports will lose out.
But since that damage is already done, we might as well allow at least one Indian company – it happens to be Jet – to gain too… 
If you have done something that is wrong I would like to see it rectified. Two wrongs will not make it right. I don’t want to see the entire Indian air space mortgaged.
Moreover, when this deal came up, there was the question of whether Naresh Goyal owned 51 per cent in the airline. It turned out that he owned only 7 per cent directly. He acquired this 51 per cent but never filed any statement that he did it. How did he get this money when he is in such a cash-strapped position?
I found out that he got a loan from HSBC after mortgaging the shares of Jet. Since Jet’s shares were almost dud at that time, there was a guarantor. And in this case it was guaranteed by Etihad. Now what happens if Naresh Goyal defaults on this payment to HSBC? It means that Etihad would become the total owner. Already, they have shifted the finance operations of the airline to Abu Dhabi.
Jet is entitled to receive foreign direct investment – I have no problem with that. But it should not get FDI this way. The deal is between two commercial parties. But the bilateral entitlement is between two governments. Why should a deal between two commercial parties be contingent upon an agreement between the two governments?
So I am not opposing Jet-Etihad deal. I am only saying that the bilateral entitlements are arbitrary. Please scrap it.
Why are you against entry of Air Asia India and Tata-SIA? Do you truly think this is bad for the country?
The policy cleared in March 2013 states that the policy is for existing airlines having financial problems. Tata is not an existing airline; neither is Arun Bhatia….
But this is a technicality. They can amend it again if everyone agrees that they are not fundamentally opposed to new airlines with foreign investment coming in….
Why don’t they? I have said this in court. Amend the policy. Life is based on laws and laws are technicalities. You change the rule first. That’s the rule of law.
You have to develop a respect for the law. This is illegal entry into the country. You scrap this and start all over again.
Second, the foreign investment promotion board cannot clear a deal in airline industry unless it establishes, after looking at the articles of association, that the effective control and substantial ownership remains in Indian hands.
With Air Asia India, Air Asia has 49 per cent and the rest is divided between the Bhatias and Tatas. Only if they stand together will they have more than Air Asia. Also, Bhatia has other business interests with Tony Fernandes (of Air Asia). Can we be sure that the two won’t collude?
FIPB should have checked this before giving a clearance. In fact, the articles and memorandum had not even been filed with them. When I raised this question, they answered that it would be gone into by DGCA in their public notice. I asked the DGCA who said that they “assumed” that this has been gone into by FIPB and been cleared because they have to do it.
Your government is saying DGCA has to do it; FIPB is saying DGCA will do it. It’s not my problem who does it but surely it has to be done.

What about Tata-SIA ? Do you think the entry of the airlines is bad for India?
Yes I do.
Why ?
I don’t trust foreigners…
But then you could be against any foreign investment of any kind….
Well, if they are transferring any big technology that will benefit India, it can be allowed.  I may be willing to take the risk.
But in this case Indian airlines are struggling due to lack of capital and expertise...mismanagement has played a big role in the state the airlines find themselves in...
The sector has been sabotaged. This government is responsible for it. This government is corrupt. These deals reek of corruption. I cannot accept it.
The way you are opposing in fact people think you are corrupt… that you are acting at the behest of IndiGo...
Tell them to say it in court. I will file for defamation. Anyone can say anything. Ask them to open my bank accounts. Ask them to check all my finances. Would I do this for free?
No one thinks you are doing it for free…
Then where is the money? They are the government. They are sitting there tapping my phones, hacking into my emails, having me followed around, getting hold of my letters – surely they can check my finances. Put up an affidavit in court. Question me in court. There no one says anything.
How many PILs are you currently pursuing ?
Let me see.  These airlines, National Herald – where I am trying to send Sonia Gandhi to jail – and the genocide of Muslims in Hashimpura.
Enough (smiles). I am a politician. I shouldn’t be spending time on this.
Why have you joined the BJP now ?
Two reasons. One, I came to the conclusion that Sonia Gandhi has to be fought and driven out of Indian politics. It is time to end the Nehru dynasty.
The second this is that I feel that this country lacks cohesion. And to bring about cohesion, I must first try to bring it into the people who are mostly likely to listen to me. That is the Hindu community. All this minority appeasement is because the Hindus are divided. So my job is to bring the Hindus to acknowledge that they are Hindus first and Brahmins and Kshatriyas later. In my view, Sonia Gandhi is working in the opposite direction. To see to it that the Hindus never unite.
But joining BJP at this time….doesn’t it seem a bit like you are backing the winning horse….
They were not a winning horse when I joined them. Read the news reports of August 2013…..
As far as economic ideology goes, what is the difference tween the BJP and Congress today?
Wherever there is scope for discretion, the Congress exercises it so that they can make money.
Their policies don’t make sense. They have Raghuram Rajan in RBI now who feels that the best way to bring down the temperature of a man who has fever is to kill him. And he’s celebrating…..I have killed the patient but see the temperature has come down.
But there are more fundamental differences. We will globalise agriculture, which they have not done. In fact investment in agriculture has been coming down. We think this is where we have an advantage. Sixty per cent of the people in India are employed in agriculture. We want the wage rates to go up so that their demand for industrial products goes up. Everybody talks about agriculture but for us it will be a real focus. This can be seen in the Gujarat model also. The real revolution in Gujarat is in this area.
We will place an overwhelming emphasis on infrastructure.  Again, they talk a lot about it but very little has been done.
How can you speak for your entire will they deal with your outspoken manner...
I have just come in now but I am not a newcomer in politics. The question is whether I can change the decline in moral standards. I am not looking at getting into government and holding some ministry. How can I change any one ministry and improve things overall? I am not an outsider who has parachuted in. I am not in search of a post. I know who blocked my contesting Lok Sabha but that person has lost heavily for that move….
Who blocked it ?
I don’t want to name him and nothing is off the record. But if you ask around, you can find out...
People allege that you almost seem to have some personal vendetta against finance minister P. Chidamabram...
Why should I do that ? Why would I be jealous of him? I was a professor at Harvard when he was a student. I have been a Cabinet minister much before him.