NEW DELHI, JULY 10: Spooked by the move to shift key operations of Jet AirwaysBSE -1.44 % to Abu Dhabi, the government will insist that the airline promises to adhere to all Indian laws, rules and regulations, if it wants approval for selling a 24% stake to Etihad.

A senior official, who did not wish to be named, said the government was specifically seeking this assurance as the Jet-Etihad investment proposal says the operations and 'revenue headquarters' of India's largest private airline will be shifted to Abu Dhabi and it will be subject to UAE laws.

This has set alarm bells ringing in the government, and the Foreign Investment Promotion Board - the nodal agency for approving foreign investment proposals - has directed the airline to clearly mention in its revised application that it will comply with local laws as well as with the country'sforeign direct investment policy. This could further add to the regulatory complications the deal is already facing.

The government official said a letter demanding these assurances was on its way. These clarifications are in addition to the changes the airline may have to make in the shareholders' agreement to give comfort to Indian authorities that "effective control and ownership" of the airline will stay in India.